As we head into a recession, many of you will be contemplating costs in your business; seeing where efficiencies may be available. Staffing costs could be high up on that agenda, with outsourcing a possible solution. Perhaps you feel you need to spend more time on strategy, to steer your company through the troubled waters ahead. This is another challenge to which outsourcing could be the solution. But is it the right thing for your organisation?
Evaluating the benefits
Two of the biggest preconceptions that may stop finance looking at outsourcing are control and cost, according to Keith Marshall, Mazars partner in financial outsourcing. “It’s perhaps down to the detail-driven nature of accountants that they feel they’ll lose control of their fi nance team if they outsource it,” he says. In Marshall’s experience, outsourcing actually leads to cost reduction through greater efficiency in the business.
On the subject of concerns over control, he’s adamant that there’s nothing to worry about. He explains: “You are actually more in control when you outsource because you have access to better, specialist people and best-in-breed technology that you wouldn’t have in-house.” When considering whether to outsource elements of their department, one thing that used to put off fi nance leaders was the lack of regular face-to-face contact that could be enjoyed with a full-time colleague. But, evolving working practices enforced by the pandemic have shown people that you can have meaningful, productive relationships with colleagues on the other end of a broadband connection.
“People are now worried that they won’t have someone available as and when they need them to pick up tasks,” says Factotum CEO Bobby Lane. He explains, however, that a good outsourcing company will do their homework and know how to work with their client to ensure that they are provisioned correctly.
Buying time
Christopher Kinsella, an interim CFO and executive director with considerable experience in this area, has seen outsourcing go in and out of fashion in the same way as centralisation and decentralisation of functionality has over the years.
He is of the opinion that, as systems become more and more sophisticated, outsourcing is a great way of utilising those systems’ sophistication in clusters, where experts can cope with the volume and the investment in an efficient way.
“I’m a supporter of it in principle,” he says, “provided we can get the advantages of that kind of efficiency above and beyond the parochial.” When engaging an outsourcing specialist, it’s important to focus on how you interact with them and the quality of information you provide, almost as much as the other way around. Bobby Lane has seen huge improvements through outsourcing when the client engages fully and openly with the incoming specialists.
“It’s like a marriage,” he says, “both sides have to be committed.” Keith Marshall has seen countless big wins in businesses using outsourcing, comparing the time and money savings that specialist, outsourced fi nance professionals provide to that of technology. He recalls: “We once replaced a team of seven people with the equivalent hours of two people and it was all down to [fixing] bad processes.” Having swapped out the fi nance team and then working with the purchasing team left in place, Marshall and his team discovered that cooperation between the two was where the majority of issues laid.
Having resolved them, the outsourced team paid for itself through savings and settlement discounts.
Getting started
For smaller businesses, there’s a strong argument for outsourcing more basic parts of the job that can swamp team members with operational issues.
Keith Marshall advocates that finance managers who are keen to dip a toe into outsourcing should keep it simple at the start. “I would advise starting with the path of least resistance with the supplier ledger or credit control and building it from there. It depends on the complexity of their business.” Having been involved in so many outsourcing operations, Christopher Kinsella thinks that those contemplating outsourcing to a significant degree would be wise to consider other departments. “The danger is to look at the finance function in glorious isolation from the wider operational needs,” he says. To get a good package deal beyond finance is something that’s certainly worth considering. By outsourcing to different, related parts of the business, such as HR, it’s possible to boost efficiencies significantly.
