Leading Practices in Finance Offshoring
Following the success in IT offshoring, the finance sector, many of whom are investment banks, have become the next key player in the global financial offshoring industry. These investment banks tend to adopt finance offshoring & outsourcing, collectively called a finance shared services (FSS), to gain significant cost savings and competitive edges when heading towards international operation.
In “Frontiers in Finance”, researchers at KPMG have revealed 5 leading practices that help investment banks – as well as other financial entities – rethink their offshoring models, conquer threats and boost value.
BUILD A CLEAR OPERATING MODEL WITH A HOLISTIC VIEW
Offshoring itself is not a “set and forget” investment. A crystal clear and holistic business strategy will always be the first step, deciding which region you should go offshore, whether you should base FSS centres in one or more destinations and which roles are to be delegated. This also includes comprehensive knowledge of present and emerging risks in outsourcing your financial functions like hidden cost, confidentiality, cultural gaps etc. To have the best possible preparation, you may want to seek advice from experienced players via your networking or, like many other companies, contact service providers in your targeted destinations.
INVEST IN A “ONE TEAM” CULTURE
No matter what the motive behind your offshoring decision is, the model would not work if you just focus on that single motive (be it cost saving, 24h support or talent acquisition). Instead, you need to promote “one team” culture in which your local and distributed teams are closely collaborating and working as integral parts in a united organisational culture. The practice currently ranges from preparing onshore teams before you go offshore, frequent communication across countries to onsite training and teambuilding. The researchers at KPMG further suggest that you should not use terms like “customer” or “customer relationship managers” when talking about internal stakeholders since it conflicts with the one team aspiration.
EMBED EMPOWERED GLOBAL PROCESS OWNERSHIP
Hiring a global process owner is a more advanced strategy to make sure your company’s operation are uniformed across countries. Simply speaking, global process owners are individuals who own an end-to-end process throughout functional, geographic and business unit boundaries. The position reports directly to the central global process owner (who is often a C-level executive) and has become quite popular among investment banks. Whether you choose to build your own FSS centre or partner with a service provider, global process ownership will be key to sustain performance agreements, clear budgets and reporting, relationships with onshore and distributed teams – simply everything to make sure your finance offshoring will be successful and beneficial.
DEVELOP A SOLID OFFSHORE RISK MANAGEMENT
No investment comes with zero risk, and the situation is much more complicated when you choose to delegate financial functions to other countries. Data security, disruptions, cultural gaps and communication issues are some current and emerging threats that need considering and carefully handling. Many investment banks have successfully tackled these obstacles with solid, comprehensive risk framework. According to KPMG, it may include clear executive accountability, senior cross-functional governance body and business continuity plans in case there are any disruptions occurring. Of course, choosing a prestigious business partner can also be a valuable assistance in dealing with hidden threats of outsourcing.
PURSUE PROCESS DEFINITION, REFINEMENT AND AUTOMATION
Finally, when even more customer-oriented industries are revolutionised with technology, the finance sector cannot turn its back to this trend and needs to apply automation, technology to offshoring practices. That is a must-have factor to move your FSS up in the maturity curve. To maximise the benefits, you have to start defining formal and informal finance activities to systemise the knowledge of finance staff, both offshore and onshore. Then, automation and advanced technologies (like cloud-based platforms, big data, project management tools) will assist further in overall process improvement and, more importantly, bring transparency to the finance offshoring in FSS centres.
You can read the full article from KPMG here. If you would like more information regarding outsourcing your financial functions, ASW Global would love to discuss this in detail with you. We are the experienced service provider in Southeast Asia, we’ve helped many companies tap into the Asian talent pool in the last 5 years.