Creating Value with Finance Nearshore Outsourcing

1. April 17, 2019
Creating Value with
Finance Nearshore
Outsourcing
Why CFOs Need to
Take a Closer Look
WEBINAR

2. It’s no secret that CFO’s are
increasingly leveraging
outsourcing as part of their
back office strategy

3. 59% of organizations
are looking to increase its
reliance on BPO
On average, organizations are
managing 83% of their F&A function
under a Shared Services Model
(45%) or Outsourcing (38%)
Sources:
-2017 KPMG SSC & Outsourcing Report
-CFO Signals: What North America’s Top Finance Executives are Thinking – and Doing (Deloitte 2018 Q3)
63% of CFOS agree that in 3 years
from now the majority of their team’s
time will be spent on analysis,
prediction and decision support rather
than accounting, reporting and
compliance

4. 53% of CFOs worry that the finance
function is reactive or that data and
information-sharing processes are not
streamlined
Declining relevance of current finance skillset is a
top concern of CFOs going into 2019, especially
Analytics and digital technologies
81% of CFOS see identifying
and targeting areas of new value
across the business as one of
their main responsibilities
The role of the Finance Department
is evolving…
Sources:
-The CFO Reimagined: from Driving Value to Building the Digital Enterprise. Accenture 2018
-Finance priorities in 2019 – Gartner

5. 91% of finance leaders in the
U.S. reported challenges finding
skilled accounting professionals
with unemployment level in the
sector being 2.5% (lower than
the national average)
…and market
conditions are
forcing you to change
Nearly half (49%) of U.S.
CFOs believe that the nation's
economy will be in recession
by the end of 2019
-Robert Half 2019 F&A Salary Guide
-Randstad 2019 Salary Guide
- Duke CFO Global Business Outlook

6. So…What are the real drivers
behind outsourcing?
1. Switch your focus from
transactional to becoming
a TRUE business partner
2. Expand access to talent
3. Increase operational
flexibility
4. Leverage outsourcer’s
technologies to innovate
faster
5. Optimize costs and get
faster paybacks

7. If outsourcing is a
key tool to help drive
this change, What
does it take to make
outsourcing work?

8. • Cost savings is a given – it’s about the
refocusing of your organization.
• Efficient, automated processes driving
high performance
• Collaborative, an “extension of your
team” with improved metrics and
reporting
• Close to home with similar work
schedules and cultural affinity
• Flexible and customized to your
environment and business needs
• Enables your team to become a Modern
Finance Organization
Outsourcing
that works!
VS
• Mainly driven by labor arbitrage,
not strategic focus
• Operational challenges are not
improved, just relocated
• “Black Box”- lack of control and
visibility over the operation
• Significant time zone and
geographical differences with
language and cultural barriers
• “Cookie-cutter” approach – nickel
and dime pricing model
• Creates additional burdens to
your team
Traditional
Outsourcing

9. When you think
outsourcing, you
generally think Asia
It doesn’t have to be…

10. • Latin America represents 24% of
the “Top 100” Global Outsourcing
Destinations (Tholons 2016)
• In 3 years, US CFOs expect that
44% of their finance workforce
will work from nearshore locations
• True nearshore locations for
North America include Costa
Rica, Colombia, Mexico,
Panama, Guatemala and
the Caribbean.
 Geographic Proximity
 Time Zone
 Low Cost
 Large and Strong Workforce
 Cultural Affinity
 Language Skills
 Lower Turnover
 Infrastructure
Primary Drivers
Latin America has
emerged as a main
destination for US
back office operations

11. Costa Rica has been
consistently ranked as the
#1 nearshore destination
in Latin America
• Hub to 350+ multinationals
• Central Time zone with quick direct flights to most major U.S. Cities
• #1 English proficiency in Latin America with almost 100% of employees in multinational companies being local
• No Army! It was abolished in 1948
• #1 Education system in Latin America with the highest literacy rate (98%)
Safest city in Latin America - recognized worldwide for its politically stability and peace.
• Strong cultural affinity to the US
• #1 country in Innovation in Latin America by Global Innovation Index (2017)
• #1 Place to retire by International Living (2018)
• Solid Infrastructure & Utilities

12. 100% of SSCs are in
expansion mode….
Source: 2016 Auxis Survey – A Deeper Exploration of SSCs in LatAm
Shared Services in Latin America
Top Functions in Scope90% of SSCs in the region
are multi-function

13. -The Wall Street Journal
ONE TO ONE
LABOR SAVINGS
25%+
SPAN OF
CONTROL
ADJUSTMENTS
PRODUCTIVITY
EFFICIENCIES
10%-20% 10%-20%
One to one comparison of
the total labor cost of a
resource in US vs. a
Nearshore Location
Most times the org structure
can be releveled to achieve
better span of control
Efficiencies gained from
centralization, process
improvement and automation
(e.g. RPA, Operational
Analytics, etc.)
Savings Opportunity Roadmap from
Outsourcing to Costa Rica

14. Average savings for
transactional roles
NY/San Francisco
$46-62K
Average
savings
per head
49-56%
Chicago
38-47%
$31-45K
Average
savings
per head
29-40%
$21-33K
Average
savings
per head
Miami/Atlanta
Austin/Dallas/
Houston
27-38%
$19-31K
Average
savings
per head

15. Average savings for
transactional roles
NY/San Francisco
$46-62K
Average
savings
per head
49-56%
Chicago
38-47%
$31-45K
Average
savings
per head
29-40%
$21-33K
Average
savings
per head
Miami/Atlanta
Austin/Dallas/
Houston
27-38%
$19-31K
Average
savings
per head
Link to download full report:
www.auxis.com/2019-US-finance-labor-report-
outsourcing-costa-rica

16. Let’s review some outsourcing
success stories…

17. • Developed a Hybrid Shared Services Model for the client’s North
American Finance Operations to support the consolidation of 3 distinct
business units, including a new acquisition into one SSC organization.
• Implemented F&A Outsourcing from Costa Rica (over 50 FTEs) for
transactional functions. Reduced operating costs by 33%, with an IRR of
90% and a payback period of less than 2 years.
• Real-time, detailed operational reporting and dashboards with PowerBI
• Applied RPA for multiple processes (e.g. AP, cash application, month-end
closing support, etc.)
• Aggressive retail expansion in Latin America. High cost, highly manual
finance back office in US not suited to absorb that expansion.
• Built a hybrid shared services model by incorporating BPO capabilities
from Costa Rica to support LatAm, and additional support to US
operations in a second phase.
• Reduced costs by 54%; IRR of 329%; payback of less than 6 months
• Designing RPA Automation for multiple activities in US and Latin America
• Though the organization was already running its finance operations very
lean, additional cost reduction synergies were mandated to free up
resources to grow the digital channel.
• Implemented BPO to serve the US from Costa Rica, absorbing AP, T&E,
General Accounting and Cash Applications.
• Achieved 40% cost reduction plus enhanced process efficiencies,
automation and internal controls.
• Automated AP Invoice Processing with RPA and developed a custom
vendor portal.
Global Media
Company
Headquartered in NY
Leading Retailer with
2,500+ stores around
the world
Multinational
Consumer Products

18. Getting Started
I want to outsource,
now what?

19. Outsourcing Scoping Framework
Transactional, Rules
Based Activities
Non-Core
Competencies
Processes/activities
needing optimization
Areas with skill
shortages and/or high
turnover
Key Indicators
Cost Savings Opportunity
of 20% or higher
Heavily tenured
organization
Management to staff
ratios of less than 5:1
Transactional activity
focus of 75% or higher
Performance
improvements of 10-15%
or higher
High attrition rates
Need for emerging
technologies (specialized
skillsets)
Candidates
for
Outsourcing
Areas of
Opportunity

20. How to Get Started
BPO Opportunity Assessment
As the first step, we recommend performing a rapid BPO Opportunity
Assessment to quantify the savings and efficiency opportunities of
incorporating nearshore capabilities to your finance organization
Key questions to answer as
part of the assessment:
1. Which of your processes make sense to outsource?
2. What is the overall savings opportunity and business case?
3. Do you have the scale required to outsource?
4. What is the optimal organizational model to support your
volumes and complexity?
5. What challenges exist in your environment to incorporating
a nearshore model?
6. What improvement opportunities exist beyond labor
savings (e.g. automation, control enhancements, etc.)?
7. What is the implementation timeline?
Approximately 2-3 Weeks

21. Key Takeways…

22. So what does the
future look like?
22
78% of young accounting
professionals say that
there has never been
a more exciting time
to be in the field…
….Don’t let them down.
Give them the right tools
and role to make everyone
successful!
- Source: The CFO Reimagined: from Driving Value to
Building the Digital Enterprise. Accenture 2018

23. Key Takeways…
• The role of the Finance Department is evolving and you cannot afford
to keep the status quo.
• Outsourcing has become a key tool to help drive the change towards
modernization.
• “Outsourcing done right” goes beyond cost savings. It’s
about increased focus, scalability, flexibility, innovation, etc.
• Nearshore brings strategic advantages over traditional outsourcing
models.
• A BPO Opportunity Assessment will help you quickly understand the
savings, efficiency gains and fit to your organization.

24. Questions

25. 25
Thank You!
Eric Liebross
Senior Managing Director, Auxis
Eric.Liebross@auxis.com