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Part - VI

The middle level which constitutes almost 25% to 35% of the work includes processes like accounting operations, general ledger consolidation, reporting. It also includes tasks such as income tax returns and tasks like underwriting. Underwriting is considered middle-level work, as it is a combination of rule-based processes and decision-making. The agent decides on issuing the policy. This could fetch an hourly billing rate of $14-16 per agent. The overall billing rate is $30,000 to $35,000 per person per year.

The top end activities constitute only 10% of the work in the finance and accounting vertical. At the top end of the scale are activities like administration of mortgage-backed securities, financial planning and analysis, requiring expertise of at least MBA finance or a statistics graduate. Other work in this category includes equity/debt market research and analysis. The overall billing rates are $50,000 to $60,000 per person per year.

Reasons for Outsourcing Finance & Accounting

• Expectation to reduce costs
  Study conducted by Deloitte suggests that the firms achieve 39 percent cost savings from moving operations to low-cost centers.

• Standardizing the Finance and Accounting Process
  Companies on their own do not have the ability to standardize finance & accounting either because of a lack of specialized resources, scale or simply because this is not their prime area of focus. This is why it makes sense to outsource it. And as the back office becomes more standardized, in particular the accounting functions, even bigger cost savings can be seen.

• Outsourcing Disaster Relief
  Organisations have become extra cautious after the WTC disaster and want to have protection against disasters. Finance & accounting activities constitute a major part of the activities of all corporates and as such even organizations not having finance and accounting as their core processes want to safeguard their finance & accounting processes. For example, after the collapse of the WTC the Twin Towers Fund (TTF) gave the task of handling the accounting functions to Outsource Partners International (OPI), a BPO firm specializing in finance and accounting. OPI's Bangalore office handles most of TTF's accounting work. Source documents are scanned in New York and sent to Bangalore by remote connection; the Bangalore office handles 95 percent of document and transaction processing.

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*Contributed by -
Pankhuri Jain,
PGP I,
IIM Kozhikode.