Best practices in business process outsourcing: outsourcing is gaining center stage in the strategic agenda of the CFO. But as companies go down the path of adopting outsourcing--either transactional or core business processes--they have to be mindful of a few tenents to ensure success of their program.

• Author: Vora, Manish
• Position: OUTSOURCING - Survey

Outsourcing a business process to a service provider is never an easy decision. In fact, it's usually a highly complex one. A recent survey brought out the issues that would top a chief financial officer's agenda in 2010. The survey findings highlighted one key fact: Nearly half of the respondents in the WNS Annual CFO survey said they planned to enhance the scope of their outsourcing engagement in the coming year.

At the same time, 42 percent identified loss of control over outsourced finance and accounting processes as the most commonly cited risk.

Loss of control is not the only concern typically associated with outsourcing. Among other key concerns voiced by finance executives evaluating outsourcing are availability of talent, lack of understanding of business environment, impact on the quality of service delivered to the end-customer (internal or external), cultural alignment with the service provider. Data security, effectiveness of the process controls, change management and governance.

For many companies, poor experience with a prior outsourcing program often acts as a deterrent to future outsourcing initiatives. When considering outsourcing services, prospective buyers need to consider: "How do I ensure that service quality does not deteriorate?" and "How will my team work with a service provider situated thousands of miles away?"

The recent economic slowdown is compelling companies to consider strategies that will allow rapid and sustainable overhead optimization. Companies across all industries are seriously considering outsourcing business processes such as finance and accounting, procurement, human resources, customer care, research and analytics. Most companies are evaluating alternative operating models like outsourcing for activities that are not considered as core to their business.

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On the other hand, in some cases, companies that have prior outsourcing experiences are considering outsourcing as an option even for activities traditionally considered core competencies or that are complex in nature, such as financial planning and analysis, supply chain management and contract management.

Meticulous planning and investment of management time and commitment are required during, each stage of the lifecycle of an outsourcing program, whether it's pre-contract, transition or steady-state operations.

Taking the Steps

To move forward with a plan for outsourcing, here are some considerations:

* Pre-contracting...