THE prospects of finance and accounting outsourcing (FAO) here in the Philippines are exciting. This, despite India leading in this area, capturing 60 percent of global F&A service delivery, according to a “BPO Outcomes” report featuring an interview with Rajesh Ranjan, vice president of business-process outsourcing research for the Everest Group. This means the South Asian country is even dominating the services captured by Eastern Europe, Latin America and other Asian nations.
The things that make India the favored destination for FAO are doable and not impossible for the Philippines. In terms of labor arbitrage, we can lower labor costs; when it comes to English-language proficiency, we’re way better than the Indians. What we need to do is expand the pool of talents we have in finance and accounting; India has a lot more people in this field that we do. We need to train more people in this area to solve the problem of poaching and the lack of FAO talent. The problem of Philippine FAO service providers is that the people they trained are being pirated by bigger and foreign BPO companies. Since local firms cannot match the compensation packages offered by these companies, the only solution is to keep training more people.
The FAO is also expanding its market. Before, most companies availing of outsourcing service are large, multinational corporations; now, the market for small- and medium-sized enterprises (SMEs) is flourishing, according to the same BPO Outcomes report. This is because of technology considerations, which SMEs would like to take advantage of. Since these businesses don’t have the financial resources to set up technology infrastructures and software requirements, the emergence of Software-as-a-Service solution addresses their needs. So instead of buying their own software, which might be very expensive, companies can just subscribe to a monthly service that includes 24/7 technology support. The BPO Outcomes report refers to this solution as Business-Process-as-a-Service, which also includes hardware and information-technology support.
Quoting an Everest report, the BPO Outcomes article cited a 15-percent drop in the market captured by top FAO providers Accenture, IBM and Genpact. Though this does not mean they are losing customers, the market’s fast growth has led to the emergence of other providers that offer services similar to the big providers’. This presents an opportunity for Philippine-based FAO providers to take advantage of this increasing demand from onshore, nearshore and offshore customers.
These are interesting developments in FAO, and the Philippines is certainly capable of improving this year if our players are given the chance to serve a bigger market. Coupled with quality work, reasonable fees and adequate support from the government, it will not be long before our country will become the biggest FAO provider in the world. You might say I’m dreaming, but looking at all the facts I would say my prediction would be proven correct a few years from now.
The writer is the treasurer of KPS Outsourcing Inc. and a partner of Inventor, Miranda & Associates, CPAs. The views expressed here are her own and do not necessarily reflect the opinions of these institutions.