Will Robots Replace Finance Outsourcing? - SystemsAccountants

Estimated reading time: 2 minutes Will Robots Replace Finance Outsourcing?

I wonder how many people watched BBC2’s Who’s Spending Britain’s Billions documentary recently? In essence it was an expose on how local authorities pay management consultants large sums of money on the understanding of “operating model assessments” and “transformation programmes”. It was revealed that these firms often take a large percentage for delivering cost savings. The programme challenged the effectiveness and efficiency of private outsourcing firms’ services in the public sector.

This also coincided with a report from ACCA’s Finance Transformation, SSC and Outsourcing Group about the challenge to Outsourcing service providers from Robotics Process Automation (RPA).

It got me thinking, just how sustainable and viable is the traditional F&A outsourcing model and what does this mean for the future of firms offering outsourcing services?

Many big BPO’s and Management Consultancies have invested heavily to establish global outsourcing facilities, managing huge estates of properties and employing thousands. Companies signing up to BPO’s agreements are often committing to cumbersome and restrictive multi-year deals which inhibits their ability to adapt to new tools and ways of working, such as RPA.

Anecdotal evidence of this threat came from a client who recently told me of a consulting firm who performed a location analysis for F&A Shared Services, no surprise the BPO provider proposed their own facilities in Asia rather than proposing a transition to the client’s own, established RPA enabled SSC in Europe, somewhat of vested interest maybe?

According to the report, the pricing of RPA erodes the traditional cost based business case and ROI. It gives figures of 1/9th of the cost of labour in an Indian outsourced SSC – which clearly threatens the long held labour arbitrage sell outsourcing companies use.

The ‘robots’ appear to be a realistic challenge to BPO providers’ operating model and seems to be the next logical step in transforming finance functions.

Given the emergence RPA, the increasingly rapid adoption of digital & enabling technologies such as Apps and Cloud solutions; together with the speed and non-invasive nature of deployment, more companies seem to be considering building their own captive centres or insourcing their F&A Shared function. The trend also applies to the multi-functional Global Business Services model.

The most obvious candidates for adoption cited in the article is Financial Services, especially the Insurance sector where complex legacy systems and complexities around interfacing to ERP means meeting ever challenging regulatory obligations very difficult. RPA could in theory solve this conundrum. The market for RPA is still very immature, however in my mind all it needs is a compelling test case and strong evidence of success from early adopters to accelerate it further up the CFO agenda.

Given the scale of investments by the BPO providers it should be very interesting to see how this plays out…