Another benefit to outsourcing, he adds, is that it could prevent the incidence of fraud. The reason? Third-party service providers tend to be more stringent in following their clients' compliance standards. "If they don't comply, they can get sued," says Lim. "Whereas if one of our internal finance staff doesn't follow certain rules and because of that a fraud occurs, we can fire the staff, that's about all. But we can't claim the money back." He adds: "Somebody who is a third-party outsourcer will have insured himself against such negligence or non-compliance."

Great Save
Lim and Leung are quick to admit that cost savings were the motivation for going offshore. Apart from payroll cuts, Lim says NOL is no longer spending US$100 million a year to upgrade the IT system that supports finance functions. "Most shipping lines spend 2.5 to 4 percent of their revenues on computer systems," says Lim.

There are other potential gains. In the case of NOL, the deal with Accenture involves a built-in incentive to continue the search for savings. NOL pays Accenture a monthly charge, according to Lim, based on a cost assumption — or projection — of what NOL would incur if it were to run the shared service center itself. If Accenture does better than this target, the two companies share on the savings. If costs are higher than target, NOL will share with the extra cost only up to a certain amount, after which Accenture bears the cost.

For Agilent, the outsourcing center could prove a source of future business as well as savings. Says Leung: "If we feel that we are doing such a good job, then who knows, after two years or three, we would have such a good infrastructure that we could do the outsourcing for other people." Another route to future benefits from outsourcing/insourcing could involve a build-and-sell scenario. Jimmy Yap, head of Asia Pacific cash management at Deutsche Bank in Singapore, says some offshore insourcing arrangements of large US multinationals, notably in India, evolve to be sold to dedicated outsourcing service providers after three to five years of operation.

In the meantime, finance chiefs and their colleagues can savor the added professional benefit of outsourcing: more time for more analytical tasks. "It's not very fulfilling if you spend a disproportionate amount of time on data mining instead of analysis," says Leung. Lim says managing transactional processes used to take up to 50 percent of some of his senior finance staff's time. Not anymore.

"We're now making better use of the time ... to be partners with the business units, and to offer more analysis and financial support.".

Abe De Ramos is executive editor of CFO Asia in Hong Kong.

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