Legal and Accounting Outsourcing to India: Finance/Accounting/Legal: Areas Typically Outsourced

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A. Finance / Accounting
Finance / Accounting is one of the basic functions of a company. It needs to be carried out in a timely manner and accurately. Else, it can lead to a delay or inability to raise funds, incorrect assessment of the performance of the company and affect the overall performance of the company immediately and in the future.

The accounting and finance function in a company can be further broken down broadly into general accounting, taxation, financial management. BPO service providers could do the company’s general accounting comprising, monthly, quarterly and annual accounting and book-keeping, either entirely or partially replacing in-house operations. They could also provide a whole host of other services within the finance / accounting function.
Typical areas outsourced include:

• Internal audits
• Financial statement preparation
• Financial projections for business plan
• General ledger maintenance
• Monthly & year-end closing assistance
• Payroll & sales tax return preparation
• Account reconciliations
• Controller & bookkeeper staffing
• Payroll & accounts payable processing
• Accounting systems design
• Accounting staff training
• Depreciation schedules
• Accounting software assistance

Some BPO service providers get involved from before the incorporation of a company – right from making financial projections for financing. In addition to the standard services, they provide consultancy in the accounting software to be used, policies and procedures to be set up, accounting policies, establishing a month-end closing schedule, compensation strategies, establishing a filing system for the new business, etc.

Software used for book-keeping and accounting would depend on client requirements. BPOs are able to use software like QuickBooks, Quicken, Myob, Sage, Creative Solutions Accounting, etc., used by their international clientele. Likewise, software and technology used for taxation and filing tax returns are those used by clients, for e.g. US based clients would be familiar with Drakes Lacerate, TaxCut, Turbo Tax and Ultra Tax.

Accounts Payables
Accounts payable is the one of the most widely outsourced finance and accounting function, according to some studies. At present, most of the account payable outsourcing happens from the USA and UK. But some websites indicate that Europe, the Middle East and Africa will have the highest growth rates in the account payables outsourcing market, although the US would retain its position as the largest market in the finance and accounting BPO market. Within the Accounts Payable function, there are several processes, all or some of which could be outsourced. These are:

• Accounts Payable Invoice Scan
• Accounts Payable Workflow
• Accounts Payable Invoice Entry
• Accounts Payable Payment Disbursement
• Accounts Payable Invoice Online Repository
• Travel and Expenses

In addition to the typical benefits of outsourcing, the added advantages of outsourcing accounts payable are:

• Centralized control over payables across the enterprise, spanning multiple locations
• Reporting of payables directly from the vendor and real time tracking ability
• Automated routing of payables for approval to manager – further improving efficiencies

B. Legal

The obvious benefits of outsourcing extend to the legal function more so than other areas. The legal and compliance functions of a company are its very backbone. At the same time, recruiting and retaining in-house lawyers with the necessary skills is difficult besides being very expensive.

On the other hand, if they were to outsource these tasks to Indian BPO firms, the savings could be immense in terms of hourly rates paid and overhead costs. It is estimated that Indian lawyers charge around 15-25% of that charged by their American counterparts. The other benefit, of course, is that of effectively getting 24X7 legal expertise on tap.

Legal outsourcing firms typically provide services in the areas of

• Setting up / incorporation
• Drafting compliance and supervisory procedures
• Performing legal due diligence
• Drafting of patents
• Filings and legal research
• Assisting in regulatory examinations
• Monitoring compliance with firm policies and regulatory requirements
• Drafting and negotiating contracts
• Advising boards and senior management on legal risks
• Serving as outside general counsel
• Paralegal, Secretarial, proof reading, litigation support services

IV. Process of Delivery by BPOs

The model for delivery of services by BPOs in accounting and legal outsourcing is usually very simple. The raw data is transferred or is made accessible to the BPO by one of the following ways:

• Email based
  All the data is emailed to the BPO. This could include scanned documents or files. The files are downloaded by the BPO on their computers. Professionals work on the data and once the work is completed, it is emailed back to the company. Based on review and feedback, there could be further changes carried out and the final documents are again emailed back. This is the easiest process, but may not be as secure as the other options.

• Secure Server based
  This is a more secure method of delivery. The customer uploads the files in an encrypted format onto the BPO server. Once there, it is accessed by the BPO whose employees work and deliver service and upload the finished work back to be accessed by the customers for their review. Again based on feedback, more changes may be carried out and the finalized work uploaded again onto the server using encryption.

• Remote Access based
  Here, the BPO is given access to the company’s servers. The BPO provides the software to install on the customer’s systems. This would allow it to log on to their servers and access files to work on. This would save the customers the inconvenience of having to upload and download files repeatedly. This method is more expensive and difficult to configure initially. This would be a more suitable option for long-term and ongoing BPO agreements, though the choice would finally depend on a thorough comparison of cost and benefits of the options.

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