I kept myself updated with the latest on finance and accounting outsourcing (FAO), since I am involved in the industry, and FAO is a fast-growing form of outsourcing in the Philippines. If the Philippines wants to be a major player in this type of outsourcing services, it needs to keep abreast of the latest trends or growth of the market.
In the latest report of Everest Research Institute dated June 2016, the global multiprocess FAO market witnessed good traction in 2015. There was an increasing number of providers using robotic process automation (RPA), particularly in transactional finance and accounting activities, which experienced increased commoditization specifically in procure-to-pay (P2P) services.
The Philippines should also look into higher-level of outsourcing, which requires expertise such as financial planning and analysis (FP&A), since it involves professional judgment and experience. The demand for this type of services is growing globally and our local providers should improve their capability to compete. There are more players now from different countries with regard to the traditional FAO, particularly in transaction processing. With competition becoming more intense, the Philippines should be ready to meet the demands of the market.
The providers, in order to remain competitive, should try to find a niche and strive for market differentiation by employing different strategies, according to the same Everest Research Insittute report. Strategies such as vertical-specific and go-to-market offerings, advanced analytics and other form of knowledge outsourcing rather than just the traditional solutions of plain vanilla lift and shift are being adopted by the providers.
So far, of the top global service providers for FAO, there is no Philippine provider yet. Our country will continue to be one of the top outsourcing, destinations for traditional outsourcing, such as customer-support services or call centers, together with India and China. But a buyer will likely outsource FAO and nontraditional services either to a local firm in their country, or those with known expertise on knowledge outsourcing or higher level of FAO, such as FP&A.
In the Philippines, where there is a shortage of accountancy graduates for employment, we need to encourage more of our young people to take up accountancy or management accounting, and other similar courses. There is a big potential for the growth of FAO globally but right now the big players are mostly foreign corporations, and we still have to see a local outsourcing firm as one of the major players in this type of service.
Most certified public accountants in the country are either employed in an audit firm or as CFOs or accountants in private corporations or government institutions. Even the big global firms in the country, which offer FAO, have to compete with the local audit firms. Graduates of managerial accounting or such accounting courses that do not necessarily lead to a CPA board exam or other certifications can be potential candidates for an outsourcing firm.
The focus is to capacitate these people in handling big projects from abroad. Another obstacle to hiring people is the aversion of some people to work the graveyard shift.
However, this may not be much of a problem for FAO providers, because work can be done in the regular hours, unless there is a need to discuss the work with the foreign clients. This is the advantage of FAO providers over the traditional call-center providers, because they do not have to work the graveyard shift because the demand for the work is different.
The future of FAO services is exciting, but there is a need to strategize to become a part of the growth. There are many obstacles but with the right strategy, the Philippines could be another popular destination for FAO and not just for call centers in the future.
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Wilma Miranda is the chairman of the Media Affairs Committee of Finex, managing partner of Inventor, Miranda & Associates, CPAs and Treasurer of KPS Outsourcing Inc. The opinions expressed here are the views of the writer and do not necessarily reflect the views and opinions of these institutions