The Future of Outsourcing: 7 Currents of Change Powering Opportunity

October 2017

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Disruptive forces are reshaping industries from healthcare to retail, and business service outsourcing is no different.

For many years, outsourcing was disregarded by most small organizations. That is due, in part, to outsourcing’s historical reputation problem. Outsourcing has often been associated with ineffective customer service or call centers, low wages and low quality. But the truth is those are symptoms of ineffective offshoring of core functions.
 
Business service outsourcing, particularly the outsourcing of the finance and accounting and human resource functions, can provide organizations small and large with opportunities to scale and focus more on core functions. And, it’s getting smarter, faster and leaner, thanks to major technological and market changes. Infrastructure is out and the service economy is in. Here’s a look at seven changes powering opportunity for outsourcing.
 

1. Digital Pulse

The days of paper mountain stacks on desks are over. According to Statista, in 2006, the total printing and paper supply in the U.S. was 32.4 million tons. In 2015, it was 19.1 million tons.

Records, invoices, receipts and expense forms have all gone digital. For the stragglers still reliant on paper, OCR reader technology, which can now integrate with hardware scanners and mobile devices, are transforming filing cabinets into antiques. The decline of paper is driving increased mobility and flexibility for accounting and finance professionals and the C-suite, as information can be pulled and analyzed anytime, anywhere. As a result, outsourcing is becoming even more efficient.
 

2. Big Data Jolt

The movement of records to digital platforms creates a staggering amount of data. In fact, IBM reports that 2.5 quintillion bytes, or 2.5 exabytes, of data are created every day, and that trend is accelerating.

90% of the world’s data was created in the last two years.

For businesses, big data means big opportunity. More than three-fourths of businesses say Big Data will fundamentally change the way their company does business in the next few years, according to IDG. In fact, most organizations have access to a data goldmine within their own walls which can be accessed and analyzed to provide better and more strategic insights for decision-making and company direction. While managing Big Data is no simple task, businesses can work with advisors to gather and extract data into meaningful insights, then use predictive analytics to identify efficiencies and better manage their workload or products. It can also help uncover potential instances of fraud or waste.
 

3. Automation Amplification

Another factor contributing to the rise of Big Data is automation. Data entry is a dying art. Automation now allows stores to communicate directly with the home office, and accounting, expense and timesheet systems to
connect directly to external systems from vendors. Seamless solutions are becoming the norm, but we are just beginning to see the impact on the accounting and finance function.

According to the Association of Accountants and Financial Professionals in Business, just 32% of companies have automated any aspect of their accounting process to date. 

Growth of the Internet of Things (IoT) will likely accelerate the automation opportunity, as 22.5 billion devices will be connected by 2021, according to Business Insider. With less time spent waiting on or acquiring data, companies and their advisors can focus more time on cultivating insights from that information.
 

4. Switch to the Cloud

Where does all this data live? Increasingly, the answer is the cloud. One area driving change across all industries is the meteoric rise of cloud storage. The first hard drive to have 1 GB in storage was built by IBM in 1980. Data was only as mobile as professionals’ ability to lug around huge hard drives. Fast forward to today and there are countless cloud storage options, some that will provide up to 15 GB of storage for free. Google stores 10 exabytes of data, and Amazon has nearly 1.5 million servers.

90% of businesses use the cloud for storage.

IDG projects that in 2018, most IT departments will have a minority of apps and platforms still residing in on-premise systems. For companies considering outsourcing services, the cloud not only boasts convenience and cost advantages, but also the ability to share information seamlessly with outside partners.


5. Security Circuit

There’s one key question executives and boards often ask about the cloud: Is it secure? Despite a few high-profile hacks and the mental worry over off-premises data, 4 in 5 IT professionals believe that data is safer in the cloud than on-premises, according to Evolve IP.

Over the next three years, Gartner predicts that public cloud infrastructure will suffer at least 60 percent fewer security incidents than traditional data centers. However, that doesn’t mean that organizations can get comfortable about cybersecurity as we believe that no organization is immune from cyber threats. When considering outsourced services and multiple vendors and advisors, it’s critical to build in a robust security platform and controls to protect critical data and information.
 

6. Off the Grid

Access to data is changing how we work and improving communication with outsourced service providers. From the home office to the sales floor, professionals are increasingly turning to remote work options. Cirtix reports that 61% of employees work from outside the office at least part-time and more than 3 devices are being used daily for work activities.

Productivity looks different, workplace values are evolving, and most companies and workers are welcoming the change. Accessibility means flexibility, and it’s also changing expectations for finance, accounting and reporting. Mobile executives expect to access up-to-date information in real time on any device. Accounting professionals are no longer sending financial statements to business owners once a month; they are working on and updating it in real time via the cloud, with the executive able to view and use it anytime. When it comes to platform development and communication, the mobile-first mentality is here to stay.


7. Talent Flow

In addition to how we work, who is working is also evolving. The Millennial generation is fast becoming a majority at many companies, ushering in new expectations for career paths. One well-documented change is the declining value of a long-term career at one company.

According to Gallup & LinkedIn, 60% of millennials are open to new job opportunities, 21% have changed jobs in the past year, and 4 job changes by age 32 is the “new normal” in career tracking. 

Companies are stuck in a broken record rut with their talent. It is more expensive than ever to recruit and retain talent, and at the same time, turnover is more prevalent. Companies are in a constant cycle of recruiting, training and retraining, and it’s inefficient and costly. Gallup estimates that millennial turnover costs the U.S. economy $30.5 billion annually.

Even without the stability of the workforce, companies still need the stability of the work being completed. Outsourcing can help organizations maintain a sense of consistency and build a knowledge bank that doesn’t disappear when an employee walks out the door.
 

Is Outsourcing Right for You?

Every business wants to improve profitability and grow. Whether you are an entrepreneur, an early-stage
company or an established company looking to cut costs or reorganize, outsourcing services can help. Constant change in technology, process, procedure and talent make it challenging for any business to keep up, and that’s where an outside advisor can really bring value. Outsourcing allows companies to tap into cutting edge technology and evolve to meet the workforce and business needs of tomorrow.
 
 

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For more information on how outsourcing can help your business, contact Kelly Johnson at kellyjohnson@bdo.com.



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