Offshoring white-collar jobs can be a great business solution for companies looking to reduce costs and improve efficiency. By offshoring Financial Planning and Analysis functions, companies can take advantage of lower labor costs in other countries while maintaining the same quality and expertise. However, to ensure the success of the initiative, it is important to manage the challenges that come with offshoring FP&A, such as cultural differences.
What is FP&A?
FP&A stands for Financial Planning and Analysis. It is a set of strategic activities that support a company’s major business decisions and overall financial health. These activities include planning, forecasting, budgeting, and analytical activities.
FP&A professionals perform budgeting, forecasting, and analysis that support major corporate decisions of the CFO, CEO, and the Board of Directors. FP&A is not merely accounting, but accounting is foundational to the process.
What is Offshoring?
Offshoring is a business practice in which a company moves various operational and service-related functions to other countries. It is done primarily to access a lower-cost labor market, but it may also be to access additional skilled labor or establish a business presence in a foreign country.
Companies offshore either through an outsourcing arrangement with a third party or by establishing other business structures. Offshoring and outsourcing are not mutually inclusive: there can be one without the other.
The Benefits of Offshoring FP&A Functions
Offshoring FP&A functions can bring several benefits to organizations. One of the most significant benefits is cost savings. By offshoring FP&A functions, companies can take advantage of lower labor costs in other countries while maintaining the same quality and expertise. It can be especially beneficial for companies looking to cut costs in the face of economic uncertainty or increased competition.
Another benefit of offshoring FP&A functions is quality improvements. Offshore providers of finance and accounting services have made significant investments in the control and monitoring mechanisms needed for high-end functions, regulatory requirements, and complex finance processes such as valuation reviews, legal-entity control, and tax preparation.
Many have even hired risk-and-control officers to deal with auditing reporting regulations such as the:
Sarbanes-Oxley Act, which mandates certain practices in financial record keeping and reporting for corporations, and requires strict new rules for accountants, auditors, and corporate officers, as well as more stringent record-keeping requirements.
Basel II: Revised international capital framework, which promotes minimum capital requirements, regulatory supervision, and market discipline.
SEC reporting, which requires companies, foreign and domestic, to file registration statements, periodic reports, and other forms.
More sophisticated vendors enable companies to cut their labor costs by as much as 30% to 70% for offshored functions, to raise productivity by at least 5 percent a year, and to improve their control and risk management.
Challenges of Offshoring FP&A Functions
Offshoring FP&A functions can be a complex process that requires careful consideration of various factors. Some of the challenges that companies may face when offshoring FP&A functions include:
Cultural Differences: Companies may face cultural challenges when working with offshore teams. These differences can include language barriers, different work ethics, and varying communication styles.
Data Security Challenges: Data security concerns may arise due to the need to maintain the confidentiality of proprietary information when business processes are moved to a different country.
Regulatory Compliance: Regulatory compliance issues can arise due to differences in working conditions and regulations between the home country and the offshore location.
Quality Control: Offshoring can result in low-quality work output due to differences in location working conditions and regulations.
Best Practices for Integrating Offshoring into FP&A Operations
By following best practices for integrating offshoring into Financial Planning and Analysis operations, companies can maximize the benefits of offshoring while minimizing the risks and challenges. Here are some best practices for integrating offshoring into FP&A operations:
Selecting the right location: When selecting an offshore location, companies should consider factors such as the availability of skilled labor, infrastructure, and political stability. The Philippines, for example, has become a popular destination for offshoring due to its large pool of English-speaking professionals and favorable business environment.
Choosing the right vendor: Companies should choose a vendor that has experience in providing Financial Planning and Analysis services and has a proven track record of delivering high-quality work. It’s also important to ensure that the vendor has the necessary infrastructure and technology to support the offshoring process.
Managing cultural differences: Companies can overcome cultural differences by investing in cross-cultural training programs, clear communication channels, and technology-facilitated collaboration.
Legal Agreements and Regular Audits: Companies can tackle data security and regulatory compliance by implementing robust legal agreements, security measures, and conducting regular audits to ensure compliance with regulations and data protection standards.
Clear Processes & Standards: To ensure high-quality work output, companies can establish clear quality control processes and standards. They can also provide training to their offshore teams to ensure they understand the quality expectations and standards.
Why Partner with iSupport Worldwide?
iSupport Worldwide has been selected as a Power Partner by Inc. Magazine, recognizing the company’s commitment to customer satisfaction and exceptional outsourcing, offshore, and remote work solutions.
Providing excellent personnel from the Philippines is a key component of iSupport’s successful partnerships with customers. The organization has consistently exceeded customer expectations by offering a top-tier recruiting process and staff retention strategies.
iSupport’s customer has retained 90% of its offshore employees, who include accountants, engineers, and product development specialists.
Another customer discovered that having a skilled back-office offshore staff enabled them to effectively develop their business while saving on costs.
How iSupport Worldwide Can Improve FP&A Capabilities
Offshoring can help companies improve their Financial Planning and Analysis capabilities by leveraging the expertise of offshore teams and taking advantage of lower labor costs. Here are some ways offshoring FP&A services may help businesses strengthen their capabilities:
Access to a larger talent pool: Offshoring FP&A functions can provide companies with access to a larger talent pool, allowing them to tap into a diverse range of skills and expertise. This can help companies improve their Financial Planning and Analysis capabilities and drive innovation.
Lower labor costs: Offshoring FP&A functions can help companies reduce labor costs, as offshore teams are often less expensive than onshore teams. This can free up resources for investment in other areas of the business.
Increased efficiency: Offshoring FP&A functions can help companies increase their efficiency by leveraging the expertise of offshore teams. This can help companies to streamline their processes and reduce the time and resources required to complete tasks.
Improved risk management: Offshoring FP&A functions can help companies improve their risk management capabilities by leveraging the expertise of offshore teams. This can help companies to identify and mitigate risks more effectively, reducing the likelihood of financial losses.
24/7 operations: Offshoring FP&A functions can help companies establish 24/7 operations, allowing them to better support their customers and stakeholders around the clock.
Partnering with iSupport Worldwide can be a powerful tool for your business to drive business growth. By leveraging our expertise in offshore teams and taking advantage of lower labor costs, your business can improve its FP&A capabilities and gain a competitive advantage in the global marketplace.
Have you considered employing offshore staff as a business solution?
Contact our team today for a no-obligation consultation and learn how we can help your business thrive.