Top 10 Tips for Outsourcing.

Courtesy: About.Com (http://entrepreneurs.about.com/cs/beyondstartup/a/uc041003a.htm)

 

Entrepreneurs and small businesspeople are always looking for creative ways to accomplish more of their business goals for less money. One strategy that can help you save time, money and frustration as you start and build your business is to outsource as much work as possible to skilled, but cost-effective, external service providers.

1. Clearly define the scope and schedule for your project

This might seem obvious, but any successful outsourced project always starts with a clear statement of what you are hoping to accomplish. Define your project requirements up front. Service providers need accurate, complete information to present you with realistic proposals and to quote you a reasonable price. Be specific about the deliverable you expect the vendor to provide. Give vendors as much information as you can about what you need delivered and the way in which you need the work done. Also, be clear and realistic about your schedule requirements - project schedules can have a huge impact on project costs.

2. Evaluate a service provider like you’d hire a full-time employee
When you’re evaluating proposals from service providers, don’t be afraid to ask questions. Just like hiring a full-time employee, selecting a vendor is a very subjective experience. Check their references and ask for feedback from other clients who have used their services. Engage in a dialog – if you have any concerns about a vendor’s specific capabilities, voice your concerns. Don’t just stew about it and hope for the best.

3. Look for specific experience fit
Ideally, the service provider you select will have specific experience with the type of project that you’re undertaking. You don’t want to be somebody’s “guinea pig.” This is especially crucial when outsourcing complex technical projects such as software development. For example, if you’re looking for someone to develop an application for the Palm PDA, make sure they’ve actually completed commercial projects on that platform for other satisfied customers. This advice holds true for other types of projects as well. If you need a business plan for opening a retail store, you’ll get best results if the consultant you hire has verifiable experience in the retail sector.

4. Don’t choose a vendor based solely on price
Though it might be tempting, never select a vendor based solely on price. Experienced buyers who have outsourced many projects and evaluated hundreds of proposals almost always recommend discarding the highest-priced and lowest-priced bid. Buyers report that their most successful projects are the ones where they felt the vendor offered a balance of good value and quality results.

5. Review portfolios and samples
Examine the vendor’s previous work (their “portfolio”) and make sure that their previous work meets your expectations for quality and style. If you’ve evaluated a vendor’s portfolio, references and previous experience and are still unsure of their capabilities, consider asking them to do a quick mock-up or provide a basic outline of a work plan. A service provider who really wants to win your business might be able to give you a rough concept so you can better understand their approach to solving your problem. But never cross the line between asking for a mock-up and insisting that a vendor provide you with finished work “on spec.” No qualified professional expects to work for free.

6. Start small
When engaging with a service provider for the first time, start with a project that is relatively small and simple in scope. This will give you a better idea of the provider’s style and capabilities before you entrust a “mission critical” project to them.

7. Tie payment to clearly defined project milestones
Just as you should be clear about project scope, make sure that you define a work plan for your outsourced project with clearly defined milestones. Having scheduled checkpoints where you review the status of the project as it works toward completion—is an easy way to ensure that you meet your final deadline and that the final product meets your standards. Tie the vendor’s payment to these milestones. A good guideline for IT and software development projects is to pay no more than 20% to 30% of the total project price up front, with the rest of the payments awarded based on the completion of 3 or 4 milestones.

8. Negotiate ownership of work up front
For any type of outsourced project, make sure that you are clear about who owns the resulting work product and any important components of that product. Make sure the service provider understands how you intend to use the deliverable that they are agreeing to provide. For example, the development of a custom software application for your personal use would be substantially different from the development an application that you intend to package and re-sell.

9. Don’t forget about support after the project is complete
For technology projects, it’s a good idea to specify a warranty or support clause so that you are assured of some amount of continuing support from the vendor after the project is complete. It’s much easier to negotiate a support clause before the service provider begins work, rather than after the completion of the project. Even creative or business services can benefit from a support clause. Suppose you need some changes to a business plan based on feedback that you get from potential investors. Or maybe you find that you need that snazzy new logo delivered in a new type of file format. Specifying some amount of free support or negotiating discounted prices for future modifications can save you time, money and headaches later on.

10. Get it in writing
During the course of a service engagement, the scope of the project, deliverable or even the agreed upon price may change. Make sure that you clearly communicate any schedule, scope or payment changes to your service provider and get confirmation from them - in writing - that they understand and agree to the changes. Similarly, keep a record of any agreement changes requested by the service provider and whether you accept or reject those modifications. Save copies of any email exchanges that you have.

You can access top-notch expertise any time you need it without the overhead of hiring full-time staff. By staying focused on your core competencies and hiring expert freelancers for your other needs, you can compete with the delivery capabilities of larger organizations while maintaining your independence.

Aria Global specializes in providing companies with I.T. and Business Process Outsourcing solutions. Offshore Outsourcing has become a very feasible trend for Organizations that are expanding or just trying to reduce their overhead expenses. Call / Email us to discuss your outsourcing needs. 

Contact: Sameer Sheth at sameer.sheth@ariabpo.com 

Accounts Payable Best Practices

Aria’s Accounts Payable Outsourcing Services Provide Centralized Control over Payables and Other Best Practices While Reducing Costs by 25% to 50% annually

Most finance organizations spend a large part of their Finance budget on processing Accounts Payable.  This is due to the largely manual effort required to enter invoices into the accounting system and, if applicable, match those invoices to purchase orders and receipts.  Yet while Accounts Payable is critical to ensure that authorized invoices are paid accurately, it is often not managed to world-class standards due to the time and expense required to implement best practices.

Is your organization utilizing Accounts Payable best practice to stay in control?  If you can answer YES to the following questions, you are. 

We know how many invoices we receive on a monthly basis

We have defined and well-documented business rules for matching invoices to Purchase Orders and receipts and approval levels that are followed explicitly by managers and Accounts Payable staff

We catch all duplicate invoices and have very small tolerances for invoices that do not match the PO or receipt

We know the number and dollar value of outstanding invoices (liabilities) before they are approved or matched

We know how many of our invoices do not match the PO or receipt and why

We know which of our managers have invoices in their inboxes waiting for approval and their dollar value

We receive invoices centrally and route those invoices to the managers that know whether the invoice is accurate, no matter where the manager is physically located

We have images of all invoices and can look them up on the web quickly and easily, eliminating time spent filing and retrieving invoices

We let our vendors look up invoice information and payment status on the web to reduce the volume of phone calls to our staff

If you answered no to any of the above questions, you should consider Aria’s Accounts Payable Outsourcing Services.  Aria’s Accounts Payable Outsourcing Services provide the following benefits:  

25% to 50% annual A/P processing cost savings without capital investment

Greater, centralized control over payables across the enterprise, irrespective of physical location 

World-class quality and accuracy, ensuring accurate matching to Purchase Orders and receipts and elimination of duplicate and erroneous payments

Real-time tracking and reporting of all payables from the time they are received from the vendor through disbursement, for client employees and their vendors

Reporting of A/P matching exceptions by vendor and exception type for improved procurement and vendor relations

Automated routing of payables for approval by business unit managers irrespective of location, enhancing control and manager productivity

Elimination of the headache of recruiting, hiring and managing clerical staff

The ability to focus on strategic, pertinent finance issues instead of non-value added activities such as A/P

Growth in Finance & Accounting Outsourcing.

The Finance & Accounting Outsourcing (FAO) industry is undergoing tremendous change driven primarily by customer demand from the CFO / Controller for permanent general and administrative cost reduction. Whether a business is in early stages of startup or has advanced to later stages of maturity, achieving and sustaining success depends on its ability to focus on right priorities. Reducing enterprise costs is the key focus of CFO / Controllers as they have the ultimate responsibility of managing the assets of the company. The need for CFOs to grow revenues while entering new markets and reducing revenue losses, as well as a general maturing of the finance & accounting outsourcing FAO marketplace, are driving a boom in the outsourcing of finance and accounting business processes.

As per Gartner Group’s study on 2012 CIO Agenda, the top three business strategies selected by the CIOs are:

• Increase Enterprise Growth
• Attracting and Retaining New Customers
• Reducing Enterprise Costs

A recent BPO Outcomes poll measuring the state of Finance & Accounting Outsourcing(FAO) among outsourcing customers shows that FAO has substantial room for growth. According to poll results, slightly more than 1/3rd of respondents (35%) said they do not have an FAO program. The next most popular response, representing 29% of the total vote was "We outsource transactional processes like Accounts Payable and Accounts Receivable. Another 18% of respondents said they outsource both transactional processes and higher-level processes like general ledger and analytics, and 18% said they only outsource higher-level processes like general ledger and analytics. 

The FAO model which has been traditionally & successfully offered by several providers across the globe gears around the historical approach where F&A transactional processes such as Accounts Payable and Accounts Receivable functions are shifted to a lower cost location for delivery. In most instances, India leads this model because of availability of its skilled low cost labor. Large BPO providers have invested millions of dollars in the creation of off-shore delivery centers. These centers are located in major cities of India such as Mumbai, Delhi, Bangalore, Chennai, Hyderabad, etc.  While other countries have come up to offer these services, India still leads because of its availability of English speaking, educated pool of people.

Let’s look at the top reasons to outsource:

• It allows you to focus on your core top business strategies and supporting functions.
• It brings in cost reductions.
• It helps you leverage the service providers’ expertise, technology and best practices in F&A.  
• It helps you adjust internal resources from non-core activities to support core business functions.

In summary, business enterprises must focus their investments and efforts on core business strategies such as growth, customers, reducing costs, offering new products and / or services, and show results. CFOs / Controllers managing the F&A function would have to continue driving towards permanent cost reduction in the major processes of F&A.

Aria provides finance and accounting outsourcing services to help clients reduce their operational costs and to achieve a faster turn-around time. In our offshore facility, we have qualified accounting and commerce professionals who work on clients’ projects and present them with reports on regular basis. We sign a confidentiality and non-disclosure (NDA) agreement to ensure client data confidentiality. We also take internal and external security measures to protect client data.

For more information please call Sameer Sheth at 510-579-8565 or email at Sameer.Sheth@AriaBPO.com.

Trends in F&A BPO Pricing

Is transaction based pricing becoming more popular over FTE based pricing in F&A BPO deals ? This is a multi-million dollar question which does not have a clear answer. While F&A BPO providers prefer to have their customer contracts on FTE based pricing, the customers would like to have transaction based pricing for obvious reason. Let us see which model would become more popular as F&A BPO deals pick up. 

FTE Based Pricing

F&A BPO providers like to get their customers commit to certain number of full time employees being exclusively assigned to the contract for a fixed period. This guarantees a fixed income for the provider for the duration of the contract. The advantages of this model to both the sides are:

1. The provider can better plan the allocation of resources. 

2. The buyer need not worry about training and re-training as the provider would ensure that they always have the required pool of trained resources available. Hence avoiding any downtime. 

3. This model helps the buyer plan out their expense as the amount per month / per year is known. 

However, the buyers feel there are certain disadvantages for them. 

1. Buyer is required to pay a fixed amount per month irrespective of the volumes. So if the volumes go down during the contract period, the buyer is still liable to pay the amount agreed upon.

2. Since the provider is assured of the monthly revenue, the buyer feels there is no incentive on the part of the provider to improvise in delivering more. 

Transaction Based Pricing

Under this pricing model the buyer pays the provider on a transaction basis. The transactions in a F&A deal could be:

1. Cost per journal entry or accounting entry.

2. Cost per invoice for Accounts Payable or Accounts Receivable.

3. Cost per paystub for Payroll processing. 

4. Cost per expense report.

The advantages of this model are:

1. Buyer pays for actual number of transactions processed. Ups and downs in volumes don't matter. 

2. Provider can create processes which can be repeated across multiple customers. This helps the provider to allocate resources for a different customer, if volumes go down for one. 

However, the providers feel the biggest disadvantage in this model is that they cannot offer most accurate pricing to their customers unless and until the internal processes are understood properly. Lot of times even the buyer is not clear completely of their internal processes. 

In summary, both models have their pros and cons, the key is that the buyer and provider work together closely and come up with a model which benefits both.

At Aria Global, we offer both pricing models. We work with the buyer in understanding their needs, volumes and offer what would work the best for them. Call us to discuss your needs in F&A space.

Trends in F&A Outsourcing

In the era of globalization many companies have undertaken outsourcing as a part of their business strategies. As more and more companies are joining the bandwagon of outsourcing, this phenomenon is gaining a lot of attention. Recent market surveys indicate that almost 80 percent of companies expect to increase their investment in outsourcing.

Finance and Accounting outsourcing can be defined as a process in which a company delegates some of its in-house accounting/operations to a third party.
In the F&A space, companies are either outsourcing entire finance and accounting functions or sourcing single functions such as Accounts Payable, Accounts Receivable, Credit and collection, Tax Preparation, Statutory reporting and Financial Statement analysis.

Recent trends in Outsourcing F & A

• Cost pressures continue to drive companies to take advantage of cheap labor in developing country like India.
• Outsourcing of accounting used to consist primarily of invoicing, AP/AR processing and other minor tasks. Now, organizations are outsourcing their entire financial transaction processing. 
• Transaction management services are the largest opportunity within the FA BPO space while accounts payable will remains the most widely outsourced FA function.
• Increased government regulations in US and European market are prompting companies to outsource F&A to external providers.
• F&A Outsourcing is not just restricted to transaction accounting. It is increasingly covering complex and high end F&A activities like year-end finalization and statutory compliance.
• Small to mid-sized business offer fantastic opportunities for outsourcing F&A.
• Major accounting firms are depending on offshore outsourcing providers for tax returns and other services.
• A survey revealed that companies today are largely adopting F&A Outsourcing not only for cost savings, but also to transform the F&A function from a resource and cost intensive support process to an integrated flexible function able to quickly respond to changing business needs.

- Finance and Accounting is one of the fastest growing BPO segment in the outsourcing industry.
-  According to Phil Fersht, Founder & CEO of HFS Research, the market for F&A  BPO services is poised for a new phase of growth, as businesses recover from the recession and focus on new strategies to drive more efficient operations in an increasingly global economy. For complete report on F&A BPO Market Landscape, visit www.hfsresearch.com. 

Given the opportunities in F&A space, Aria Global has taken the initiative of offering cost effective F&A outsourcing solutions and services. For more details go to www.ariabpo.com. 

Welcome To Aria Global's Blog !!!!

Welcome to Aria Global's blog. Aria Global Technologies specializes in providing companies with I.T. and Business Process Outsourcing solutions. Offshore Outsourcing has become a very feasible trend for Organizations that are expanding or just trying to reduce their overhead expenses.

At Aria, we help companies in:

• Identifying the areas which can be outsourced.
• Identifying reliable companies where work can be outsourced.
• Setting up the process for transitioning work offshore.
• Creating agreements to ensure that your data / information is safe guarded and the work product is delivered on time. 

Keep checking our blog for more updates on whats happening in the outsourcing world.