In today's world of increased automation, a growing scarcity of highly skilled employees has necessitated businesses to explore new processes to outsource. One of the most needed outsourcing services is that of financial services.
Actually, outsourcing is not exactly a new idea, but it has been made very easy by the growth of communication facilities. Many forward-thinking companies use financial outsourcing today to reduce their overheads.
In outsourcing the strategic control remains with the main company while procedural control (i.e. the day-to-day function) is completed by the service provider.
Why do Companies Outsource?
When companies expand and need to develop or upsize their financial department many find that the costs of doing so are prohibitive and that readymade financial solutions rarely suit all the individual requirements of the company.
So, increasingly SMEs and even many larger companies outsource their finance department to a dedicated provider, who can provide a level of expertise in a range of fields that would be impossible to deliver themselves. As companies grow they need to increasingly call on additional financial services such as risk management, collections and customer service in order to compete efficiently in their marketplace, and those services can be seamlessly bolted-on by an efficient outsourcer.
Therefore, rather than employ specialists in-house at great cost and build or buy-in sophisticated software developing systems from scratch, it is a far better solution for many to outsource their finance function. Further, this leaves owners free to concentrate on growing the business, rather than worrying all the mundane, but essential financial services professionally taken care of by the outsourcer.
Advantages of Outsourcing
With outsourcing, it is possible to receive the highest quality of work possible. Outsourcing no longer only refers to overseas sweatshops where employees work long hours for little pay. It now also occurs domestically and often at prices which are more than generous. Thanks to savvy entrepreneurs who realize the benefits of offering their services on a contract basis, outsourcing has become the wave of the future.
One of the most advantageous aspects of outsourcing is the ability to employ industry experts for the completion of certain tasks. This becomes beneficial in situations where a business is faced with a complex problem which is beyond the expertise of the in-house employees. Outsourcing gives the business the opportunity to outsource the task of solving the problem to a highly qualified candidate. Take for example the complex task of payroll processing. This is a very critical task, and companies cannot afford to make any mistakes in the remuneration process. Holidays, extra work, late arrivals, taxation - there are many aspects to consider while finalizing salaries. Even with a good software, the task is daunting. Many organizations therefore prefer to outsource payroll processing to experts. If one focuses only on finance and accounting, end to end accounting, audits, asset evaluation and management, inventory audits, taxation (including the GST introduced in India in 2017) and costing are some services that companies prefer to outsource. Here is a gist of advantages offered by outsourcing:
In the international context too, outsourcing offers the following benefits: