Going Away

That is undoubtedly more than many CFOs are willing to do for workers who are not, after all, on their payrolls. Then again, not many CFOs are happier than Cocuzza with their outsourcing experience. Current trends suggest, however, that many more soon will be.

Randy Myers is a contributing editor of CFO.

No Cutting Corners: Orange Goes Offshore

At first glance, Orange Business Services, a $10 billion subsidiary of France Telecom, wouldn't seem an obvious candidate for outsourcing finance and accounting activities. The Netherlands-based company had already standardized finance activities across the globe into five shared-services facilities.

Along the way, it reaped many of the process improvements outsourcing promises, with one catch: its shared-services centers were located in high-rent locales like Oak Hill, Virginia; Paris; Slough, a London suburb; Dublin; and Singapore.

So although regionalizing the finance organization yielded good results — Orange earned payback on its $24 million investment in just over a year — Orange vice president of finance Graham Russell ultimately concluded that he needed the labor savings inherent in cheaper locales.

After choosing Accenture as its outsourcing vendor, Russell says, "we ended up in India for everything in English and Poland for everything requiring foreign languages." Everything, in this case, meant mostly transaction-processing work associated with accounts payable/receivable, general ledger, fixed assets, travel-and-entertainment expenses, and cash management. The transition was completed in 2006.

Orange could simply have moved its own shared-services centers to low-cost locations, but Russell preferred the outsourcing route, in part because it could be accomplished relatively quickly. "At the time we decided to go to India, we had very little presence there. We would have had to build or lease a facility and hire 200 people," he explains. "All Accenture had to do was fill seats; it already had facilities and a labor pool." Russell also appreciated that by 2005, leading outsourcers had formal and proven approaches for documenting processes and transitioning them offshore, and had made heavy investments both in quality methodologies such as Six Sigma and in business-continuity and disaster-recovery planning.

Russell also liked the notion that an outsourcer could handle all the administrative tasks of managing an offshore workforce, and that it could offer scalability. The big challenge, he says, was negotiating the outsourcing contract. So although he generally eschews hiring consultants, Russell tapped EquaTerra to help negotiate the terms of the contract, including service-level agreements and a statement of the work to be covered. "If you're not comprehensive," he warns, "you could find yourself really cutting corners."

Although still early in the new arrangement, Russell says it is so far working out well. Orange continues to operate its five shared-services centers, but at greatly reduced levels, having outsourced the work of 200 of the 300 people who originally staffed them. Over time, the relationship between Orange and Accenture could even expand. "As I get more comfortable," Russell allows, "I could see us moving further up the food chain in terms of the activities we are willing to outsource."

That's a concept more CFOs seem to be getting comfortable with every day. — R.M.

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