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Finance and Accounting Outsourcing And Emerging Outsourcing Destinations

|Includes:HSBC Holdings PLC (HSBC), WNS
By: Jamee C.

India has been the top choice for many companies when they consider outsourcing mainly because of the benefits associated with outsourcing to India. However, it seems that this will not be the case for long as emerging destinations in the field of outsourcing, particularly in accounting outsourcing, are paving the way for companies to go beyond India into other locations.

According to a list provided by A.T. Kearney, India was the top outsourcing destination in 2010, but this does not mean that Indian providers are solely dominating the outsourcing industry. A.T. Kearney points out that the Middle Eastern companies are becoming more attractive to businesses as they are rapidly climbing up the outsourcing ladder, especially for finance and accounting outsourcing.

With the beginning of March, news came out regarding Sri Lanka's emergence as a popular destination for finance and accounting outsourcing.  The country is proving to have a great potential in handling outsourced projects as compared to the other emerging outsourcing destinations. Sri Lanka has even been regarded as a country with a workforce fit for the finance and accounting industry and many global companies have already tapped this market because of its pool of talent. The Sri Lanka Association of Software and Services Association published a report showing that the rich talent pool is the primary factor that drives companies such as HSBC (NYSE:HBC) and WNS Ltd. (NYSE:WNS) to set up a part of their operations in Sri Lanka. Some companies may have started to host their operations in Sri Lanka prior to 2011, but it is only now that they are being recognized as an ideal outsourcing destination for finance and accounting.

Apart from Sri Lanka, the Philippines is also regarded as one of the target destinations when it comes to finance and accounting outsourcing and in fact, the Australian market considers the Philippines as a top outsourcing destination. It may only come in third place as an outsourcing destination for general outsourcing, but the country is already garnering recognition for its capabilities in providing finance and accounting services.

Similar to Sri Lanka, the Philippines’ main attraction for business opportunities revolves around its rich talent pool. When it comes to costs, there are other countries that offer competitive prices, but the main challenge for them if they coordinate with those countries is the competency of the employees; it would still take them some time to train and enhance the skills of the employees.

, meanwhile, a new finance and accounting outsourcing destination, is attempting to address labor cost as it is a main concern of companies turning to outsourcing. The country is taking advantage of the transfer of processes from private companies to shared service centers and that there has been an increase in the interest of private companies in outsourced back office solutions. This is reflected as institutions in the country are familiarizing themselves with standardization of shared services processes.

The first quarter of 2011 is almost done and these three countries, Sri Lanka, Philippines and Kenya, are looking to have a bright future in finance and accounting outsourcing with these three destinations aiming to blossom into a more established outsourcing market.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Stocks: HSBC, WNS