Balancing BPO and Shared Services in a Complex, Global Environment
How one company leveraged BPO to reduce risk in Latin AmericaDOWNLOAD
A leading global provider of cleaning and hygiene solutions engaged Deloitte Consulting LLP to evaluate outsourcing for part of its global Finance and Accounting (F&A) operations, as part of a broader enterprise cost reduction initiative. While the company already had begun to consolidate F&A operations into regional Shared Service centers, they were interested in seeking a cost-effective and sustainable solution. Largely due to the largest of these centers,, located in Buenos Aires, Argentina, the business case for outsourcing versus transitioning to an existing network was essentially a tie. However, qualitative factors such as their previous, while limited, experience with outsourcing and managing perceived risk related to operating a large shared service center in Argentina, weighted their final decision in favor of outsourcing.
As part of an enterprise-wide cost reduction effort, the company’s Finance organization was looking for a way to lower operating costs by expanding the geographic and functional scope of an existing outsourcing contract, previously only covering their European operations. Additionally, the company wanted to explore comparative savings from scaling up existing shared services as a potential solution on a stand-alone basis, or in combination with, further outsourcing.
The company had already made use of limited outsourcing, primarily in Eastern Europe, to support their Accounts Receivable, Accounts Payable and General Accounting needs of its European operations. As this work had become stabilized and standardized and with a now mature supply market, there was an additional opportunity identified to transition more of this work to a lower cost, far-shore location from Eastern Europe to enjoy greater cost savings.
With the largest overall scope in North America, the potential to leverage the Buenos Aires center for both North and South America became an early focus for evaluation. Similar operations in other geographies leveraged limited use of regional Shared Service hubs, with small centers in Malaysia and China also supporting respective regional businesses.
Having an existing center in a similar time zone, with tested capabilities, infrastructure and capacity, was a major financial advantage for this specific company’s current finance operations. The additional scope appeared manageable within the existing Buenos Aires capacity, service requirements were being met and local leadership had recent positive experience in transitioning work from throughout Latin American operations to the Buenos Aires center.
However, there were two primary decision drivers that caused this client to choose outsourcing, versus the perceived control of retaining these finance functions within a regional Shared Services network.
The client ultimately chose to further leverage outsourcing as part of their overall strategy for managing risks and end-state vision of what they wanted their Finance organization to look like. Additionally, they ultimately selected the provider of their current onshore Europe outsourcing services, with a significantly renegotiated geographic and process scope over a 5-year contract term.
Deloitte assisted the client with understanding the financial impacts of an expanded shared services and outsourcing solution, including an evaluation of two possible outsourcing vendors and eventual contract negotiations.
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