Arvato: Source Code - Rajiv Dey
Rajiv Dey, director sales and business development UK Arvato Finance Services, speaks to FDE about cracking the outsourcing code.
How is the market for financial services outsourcing developing?
I think there is a definite trend within companies to re-organise their finance and accounting departments into centralised or regional shared service centres in onshore and near-shore locations. This delivers productivity gains and cost efficiencies. However, the next big chunk of cost saving can only be achieved by leveraging offshoring – moving the operation to a country that has a significantly lower cost base.
Many organisations lack the in house expertise to manage these transitions and given the associated risks they prefer to outsource to a specialist who has the project management expertise, is willing to underwrite the risks and is able to commit to stringent services level agreements that deliver the productivity gains and cost savings.
What is your opinion on whether an organisation should set up a captive shared service centre or use an outsourcer?
It really depends on the specific requirements and business case of each organisation to decide on whether it should set up a captive operation or use a third party outsourcer as there are advantages and disadvantages to both options.
Having said that, the recent market experience shows that in the long run successful captive financial shared service centres have been spun off as independent third party outsourcing businesses and are no longer captive.
Two good examples are British Airways shared service centre becoming WNS and GE Capital shared services centre becoming Genpact. Both are major outsource service providers today. In both these cases the parent organisation was able to realise more value by converting the captive to an independent third party outsourcer.
Similarly, unsuccessful captives tend to lose their business to outsourcers. This happens because the cost structure of a captive tends to rise over a period of time and at a certain point it becomes uncompetitive compared to an outsourcer, particularly when its size is limited by the internal scale of operations.
What does Arvato Finance Services (AFS) offer?
AFS is a premium financial services outsourcer with a comprehensive offering in purchase to pay, order to cash, debt collection, back office processing and related financial accounting and reporting. We have specific solutions around rating and invoicing, risk management, dunning services and cash operations, which is supported by a global banking and payment processing network, handling credit cards, debit cards, direct debits, electronic fund transfers and cheque processing.
We support our customers with a global delivery model using a mix of shared service centres, onshore in the UK, near-shore in Ireland and offshore in India and China, providing a one-stop global solution to meet the requirements of multi-national clients. All processing centres have multi-lingual financial services call centre customer support operations.
What are the future trends in financial services outsourcing?
The future of financial services outsourcing is being shaped by the following trends. Firstly, the need for more judgemental and decision making analysis as opposed to rules based transaction processing – so, for example, the scope of an accounts payable administration gets extended into the area of procurement analysis.
Second is the increasing importance of regulatory compliance – adding a further layer of cost and complexity to financial processing. Thirdly, increasing levels of technology investment are leading to more web-based transactions as the internet develops into a significant channel to market. Finally, there will be further process automation, where the technology investment justifies the reduction in manual processing.
Outsourcers will need to adapt their current service offering to address these emerging needs. At AFS, we have invested heavily in developing technology platforms that allow us to meet the requirements of some of the largest internet businesses in the world.