Examples of Finance and Accounting BPO

British Petroleum outsourced its finance and accounting functions to Accenture in the early 1990s. This was Accenture's first BPO deal. Among the F&A functions outsourced were:

• Item processing
• Imaging
• Image archiving
• Inclearing
• Lockbox processing
• Corporate check fraud prevention
• Pension and expense administration

Other firms have since followed the path of British Petroleum. Let's look at two specific examples Rhodia and Dairy Farm.

Rhodia and Accenture
Rhodia, a $7 billion maker of specialty chemicals headquartered in France, conducted a benchmark study and found that its support processes were falling into "worse than average" category. To improve their support processes, Rhodia turned to F&A BPO to achieve improved performance and cost reductions.

In 2001, the company entered into a six-year contract with Accenture to transfer the bulk of its financial and accounting functions to a shared service center in Prague. Why Prague? Rhodia decided that moving to a Central European location where salaries and operational expenses are about three-fourths less than in Western Europe was a sound business decision. Rhodia laid off about 200 local employees and replaced them with Accenture's staff in Prague.

Transitioning to Prague shared services center required a phased approach, starting with all the UK units and following with several waves (30-50 people at a time) from the French locations. By the December 2002 target date, almost 90 percent of the transition was completed. The lower cost of living and salaries in Prague is estimated to have yielded several millions in annual savings.

Dairy Farm International Holdings is a leading retailer of fast-moving consumer goods in Asia Pacific, with more than $6 billion in annual revenues and 60,000 employees in ten territories. In the late 1990s, as competition increased dramatically in the Hong Kong market, Dairy Farm embarked on a restructuring effort, which focused on strengthening core competencies, reducing operating costs while growing revenue, and avoiding capital outlays in non-core areas.

Dairy Farm and Cap Gemini Ernst & Young
Dairy Farm teamed with Cap Gemini Ernst & Young (CGE&Y) Asia Pacific to build OneResource Group (ORG). ORG provides accounting, finance, and procurement services to companies globally. During the first two years of operation, ORG radically reshaped the finance function for Dairy Farm. Now, Dairy Farm Hong Kong only employs one finance person outside of ORG.

In the first two years joint venture of its joint venture with CGE&Y, Dairy Farm accomplished the following:

• Consolidated to a single financial system across business units,
• Reduced the finance and accounting staff by nearly 50% overall reduction,
• Achieved a 30%decrease in costs,
• Negotiated more than $3 million in savings in the procurement of operating supplies,
• Implemented online tools for budgeting, management reporting, procure-to-pay, and T&E processing, and
• Established a low-cost processing operation in mainland China.

The goal of Dairy Farm's BPO project: build world-class capabilities in finance and procurement while avoiding the associated capital outlays.

The bottom-line: CFOs and their direct reports from across all types of organizations and industries are now examining finance and accounting outsourcing. They are looking for ways to improve various transaction-intensive areas of their operation, such as, auditing, reporting, accounting, receivables and payables.