Role of CFOs in offshore outsourcing

In modern times, the future belongs to only those who are ready to break barriers and explore beyond standardized norms. So are you ready to face the future?

Being "global" is no more about setting up business units across the world but work towards the integration of such units representing one enterprise.

This results in forming interdependent network of worldwide assets to have a faster growth rate for the company as a whole.

With the finance world fast changing tracks, the role of CFOs are shifting to higher gears. His role is no more confined within the guarded walls of the finance department. He has an opportunity to expand his horizons with the ability to provide the truth. The CFO with a dynamic and visionary edge will be able to set up a finance organization which is highly integrated.

According to The Global CFO Study, 2008 conducted by IBM, the CFO should be able to provide a single set of facts about the business that reflects the reality of the enterprises‘ performance generated by hard data. This would further help the CFOs to set up a finance organization which would help in framing operational decisions and strategic directions.

The IBM study further reveals that the CFO can attain enterprise standardization through establishing global standards through process ownership and simplifying the enabling systems and organizational structures.

While working towards establishing a finance management function for the organization, the CFO also can take up the leadership in risk management. The risk management is about orchestration from the Board level to middle management. This can be achieved through the CFO‘s orchestration of risk management and the convergence with performance management. This was supported by the IBM study reports.

With an increased amount of finance functions being outsourced, the CFO should be able to set up a dynamic framework with his expanding responsibilities in order to facilitate in contributing to the positive growth of his enterprise.

CFO‘s role in offshore outsourcing:

1. Envision the scope:

If you think that only basic tasks such as commodity and transactional activity can be performed remotely, think again. Companies are increasing the scope of offshore outsourcing to include decision support activities like reporting of various types and expert function activities that depend heavily on analytics.

2. Demonstrate leadership:

In the same ways that you as a top executive are called to lead and not dominate or interfere with your staff function, offering guidance and counsel and assisting in a way that makes the service provider look good is a sure shot way to extract great performance.

3. Design the finance organization:

Use offshoring as a tool for a fundamental re-design of the finance operating model. This would help you decide what all can be off shored and what needs to absolutely stay in or near head quarters. Certain GE companies have offshored upto 40% of their finance function

4. Manage Performance:

It is important to set detailed, measurable expectations for strengthening the off shore relationship. "You don't want to micromanage what you've outsourced, so you need to have the right reference points to measure them against," says ETS's CFO Frank Gatti. He recommends asking the vendor for an easy-to-read dashboard showing early warning signs for problems, along with more-detailed weekly or monthly reports.

John Percival, Adjunct Professor of Finance, The Wharton said. The enterprise cannot sing if the harmonies are not produced. The result is discordance. Every enterprise will have its standout performers. As a key member of top management, the CFO must help orchestrate the performance of the whole. Greater integration represents the sheet music.

The CFO can add much insight and value to the organization if he is ready to take that extra step and frame the sheet music.