Commentary
To outsource, or not to outsource. That is the question.
At least, it is a question faced by many treasurers. While the dilemmas they face are not as existential as those confronting Hamlet, they do raise some fundamental questions about how the company should operate, and its priorities. While Treasury is rarely the driver behind these discussions, it usually gets caught up as other functions, such as Accounting and Accounts Payable, go down this path.
Feedback from peers on the call was surprisingly consistent: while there is no right or wrong answer, there are essential steps to ensure the best outcome, whichever route is chosen.
Insourcing: COEs and SSCs
Most companies operate some form of in-house shared back office function, usually in a low cost jurisdiction. Shared Service Centres (SSCs) have, in some cases, evolved to go beyond routine processing and become Centres of Excellence (COEs), taking decisions and providing expertise. Views of these entities were generally favourable: they are efficient, and reduce cost. Views diverge when it comes to outsourcing these centres to a third party.
Most companies operate regional SSCs, with some discussion around the use of global models.
Process
The objective is usually to move away from activities, such as payments or FX confirmations, which are not core competences; or – most often – to reduce headcount and save cost. However, if the process is poor or there are too many exceptions, outsourcing can add cost and make improvements even more difficult in the future. A thorough process review and good SLAs are required, but the time is often not available.
One peer views back office functions as strategic, especially when they impact customers.
Other issues
- Providers:
- There was scepticism about ...Please Log In / Register to read the remainder of this Commentary
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