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The Evolution of Finance and Accounting Outsourcing (FAO)

The Drive for Permanent Cost Reduction

The Finance and Accounting Outsourcing (FAO) industry is undergoing tremendous change driven primarily by customer demand from the CFO/Controller (or head of the Shared Services Center) for more “value”, or more appropriately, “permanent general and administrative cost reduction”, from the service providers in this industry. This drive for permanent cost reduction by the CFO/Controller is a fundamental disconnect with the value proposition offered by the large Business Process Outsourcing (BPO) Service Providers who promote “labor” savings via “labor arbitrage” through “off-shoring” of finance and accounting jobs to perform the FAOprocesses in a cheaper cost of labor geographic region like India or China. A large FAO contract is still costing the CFO/Controller a significant amount of money, albeit less than what the organization was paying for predominately United States labor rates for accounting personnel.

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