Outsourcing Finance Not Catching On

Companies with established shared service centers see little need to go through the rigmarole again.
Stephen TaubApril 21, 2004

Companies with mature shared service centers have found little or no occasion to outsource key finance areas, and most companies are unlikely to increase their outsourcing in the next three years, according to a survey by the Hackett Group.

The reasons, said Hackett, include concerns over cost, quality, and control, as well as insufficient empirical case studies that quantify the value of outsourcing finance.

Hackett’s research is based on a survey of 15 companies with mature shared service centers — with “mature” defined as having been in place for at least three years — that incorporate finance and accounting operations.

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According to the study, 11 of the companies do not currently outsource any complete finance processes, and 9 companies have not changed what they outsource in the past three years.

When the companies were asked to break down their current outsourcing of four major finance processes — accounts payable, accounts receivable, general accounting, and payroll — only four companies said that they outsourced payroll. Just one company said that it outsourced accounts payable; none outsource accounts receivable or general accounting.

These trends don’t figure to change anytime soon; most of the surveyed companies report that they are unlikely to outsource any of the four processes in the next three years.

“There’s no question that outsourcing is a very hot discussion topic right now in the finance world,” said Hackett senior business advisor Penny Weller. “But our research provides compelling evidence that perception far exceeds reality.”

Weller noted that “companies are finding that if they do shared services well, they reap significant rewards without having to outsource finance.” In fact, she added, if companies outsource without improving their internal processes first, costs can actually increase dramatically.