The market developments and trends in any product or service sector offer threats as well as opportunities to the exporters and outsourcers. The coherent existence of the same has resulted in a mixed environment for finance and accounting services providers. Finance accounting services have come a long way with many top companies outsourcing their core processes to third party specialists, and experts across the globe and the current trends in the sector are influencing businesses in more ways than one.
Finance accounting services providers in the developing countries are being faced by a dynamic scenario stemming from the trends in the European Union markets. Some of the major factors that are influencing this important outsourcing segment in the DCs are as follows:
1. The increasing number of regulatory and compliance changes are affecting the demand for finance and accounting services in the EU. The trend of sub contracting the increased workload related to the standardized and generic work processes, to the smaller firms in developing countries, is generating revenue flows for the finance accounting services providers who have limited access to the bigger clients.
2. The trend of offering vertical services by concentrating on specific industries is offering the finance and accounting services providers in the EU, higher margins and an opportunity of focusing on more complex higher value services, rather than standard work processes such as bookkeeping, accounts management, accounts receivable and payables, etc. These work processes are being off loaded to their sub contractors in the developing countries.
3. The economic crisis in the European Union has increased availability of qualified and expert accountants. It remains to be seen whether the finance and accounting services firms are able to retain the expertise in the long run, once the economy recovers.
4. The finance accounting firms in the developing countries are facing increasing competition from the near shore firms, as more and more qualified companies are joining the bandwagon to take advantage of the work being off loaded from the EU. Finance and accounting services firms in the developing countries are now entering into interesting partnerships with these near shore accounting service providers.
5. The increasing number of qualified finance accounting services providers from developing countries such as India has made the client cost higher than before. This has decreased the competitiveness of the Indian firms among the firms offering outsourcing services in the developing countries.
6. The current trend of EU companies looking out for alternative BPO locations offshore and near shore is posing a threat to the finance and accounting services firms in many countries. However, it also acts as an opportunity for newer firms who have so far been kept away from the sub contracted work.
7. The possibilities for the finance accounting services firms are getting reduced with the increased usage of online accounting services. The clients are finding it unnecessary to outsource the general accounting services to third party firms.
8. The companies in the EU are hesitating to outsource the finance and accounting services to the smaller firms in the developing countries as they are doubtful about the levels of security, knowledge and quality of the latter. The loss of control over the processes is also limiting free sub contacting of the increased workload.