21st Century FAO Risks: The Era of Service Chain Management

Recommended read human resources, information technology and accounting management.   Outsourcing.   Frankly, in my opinion, this practice tapering off is a good thing.  What do you think?

Excerpt:  “Once you get beyond, say, payables and receivables,” reports Stan Lepeak, KPMG’s director, global research, management consulting, “most FAO outsourcing becomes extremely complex due to reporting requirements.” What’s more, companies are using outsourcing partners to manage increasingly complex work.

As recently as five to 10 years ago, many outsourcing experts expected FAO to grow and expand in much the same way that ITO and, subsequently, HRO partnerships flourished by A) increasing in number, and B) greatly increasing in magnitude. Some pundits even envisioned a day when the finance and accounting function would be staffed by a few senior experts (in treasury, M&A and a few other strategic activities), while all of the more tactical processes would be farmed out to shops in Bangalore and Dalian.

FAO took a different evolutionary path thanks to business regulations with significant financial reporting components, like Sarbanes-Oxley and Dodd-Frank, as well as the impressive efficiency gains many finance functions achieved – through outsourcing, yes, but also via shared services, process improvements and new automation — during the past 10 years. Leading finance and accounting functions cost as little as 1 percent of revenue today.

Although FAO, HRO and ITO outsourcing to low-cost countries continues, some experts expect it to taper off.

Read full article via 21st Century FAO Risks: The Era of Service Chain Management | Business Finance.

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