Business Process Outsourcing

Process optimization is high up on every CFO’s agenda. According to market research by Nelson Hall, last year saw BPO activities for a total of 280 million US$. From now to 2012, a growth rate of ten percent is expected each year. BPO first started when large organizations outsourced their IT departments to India and other offshore locations. The success of the business model encouraged organizations to start outsourcing other business processes as well. Today, BPO of finances, procurement and other processes are no longer exceptions. In the field of BPO, Steria is an important global player. The company acquired Xansa in 2007, a British organization that reached leadership in the BPO market for finance and accounting through several offshore service centers. Xansa’s clients include the BBC, British Telecom and the National Health Service. Obviously Xansa brought substantial scale and know-how to Steria. Xansa was the first British IT company to get into India and set up several large service centers, with over 5,000 employees in total.

 

Since the acquisition of Xansa, Steria finds itself increasingly drawn into the market of IT enabled BPO, combining the management of business process services such as human resources, finance and accounting, life and pensions, and customer service, with the management of the IT applications, the IT infrastructure and the data centers that are necessary to run these processes. In this context, scale is important for Steria. The large scale of transactions, for example for procure-to-pay, order-to-cash or account-to-report is what Steria’s financial BPO service allows to make the difference. Market research indicates cost savings between 20 and 30 percent in this field. Moreover, BPO players – like Steria – even offer performance commitment in their contracts. But then again: it’s all about scale. To achieve this type of savings, an organization needs a certain scale. Finance departments with under 30 employees don’t have the scale that is required to reap the financial benefits of BPO.

 

But there’s more than cost savings alone. Besides being an interesting way to achieve cost reduction, organizations regard BPO also as a means for strategic advantage. Through the concept of BPO, these organizations replace inefficient legacy processes by more productive and efficient ones. Some organizations view BPO as an interesting alternative for their own shared service centers. BPO allows them a clear out the heterogeneous complex of procedures and software that has been building up over the years, scattered over several company sites, as a result of mergers and acquisitions, and so on. For this type of companies, BPO offers a way to quickly implement new best practices throughout the entire organization, avoiding the complexity of bringing all procedures and software to a new common ground themselves. This way, BPO takes away the focus from the classic transactional processing issues, allowing the company to look more into its strategy. An additional advantage of the collaboration with Steria for BPO is the fact that Steria also supports its customers in a way that is fully compliant to SOX, IFRS and other applicable rules and regulations.