Business process outsourcing in finance and accounting - the opportunities in India

Abstract

With the competition’s pressure, the imperatives of operational performance and competitiveness, the financial services of the companies must have an organization which enables them to provide a high level of service at the lower cost. To meet these new requirements, some outsourcing solutions like BPO enable companies to concentrate on their core businesses by adopting new ways of operating, to become more competitive. IT-enabled services (ITES) include services that can be outsourced using the powers of IT; the extent to which this is possible depends on the industry, location, time, costs, and managerial perception of the risks involved. The Internet has facilitated the execution of several activities, previously done within geographical proximity to the firm, from remote low-labour cost locations, drawing both transaction cost and production cost efficiencies. The paradigm shift that the Internet has brought about in communication has thus opened up a plethora of opportunities for outsourcing business processes across continents. Many of the processes that could not be outsourced earlier are done so now thanks to the developments on the IT front globally and the growing level of comfort parent firms have with BPO firms in countries such as India. There are in fact many specialized BPO vendors across the globe, and India is today a major hub. Indian companies such as Wipro and Spectramind are top-ranker in the BPO market, a market which is expected to grow exponentially in the coming years in India. But why do western companies choose India to outsource their financial and accounting processes?