OPI: Being Singularly Focused
Date: Thursday , May 31, 2007
Kishore Mirchandani has been making rounds, convincing leaders of finance and accounting to outsource their functions. His pitch: No other company can deliver the efficiencies and economies of scale his company Outsource Partners International (OPI) brings to the table. CFOs across verticals are buying into Mirchandani’s pitch. OPI’s ability to handle finance and accounting programs of varying complexities up to end-to-end engagements makes it a new frontier in global outsourcing. Several players in the market claim that they can handle finance Business Process Outsourcing (BPO) better than the others.
“What they are doing is transactional processing,” says Mirchandani. Since its initial days, OPI has truly expanded beyond handling transactional processes. Today, it has the ability to handle tax compliance services, financial reporting, stock option accounting, valuation of businesses and, market research. “Our focus is on complex functions, which are core to an organization. No other company has as many accountants [OPI has approximately 1600 employees] on job as we do.” OPI is perhaps the only niche player in the BPO space dedicated solely to providing finance and accounting outsourcing FAO) services.
This has made them among the strongest candidates to win FAO engagements. For Mirchandani the real expansion engine has been a recent change in customer attitudes about FAO. Today, outsourcing finance and accounting is considered safe, acceptable, and routinely tactic. “Our discussions with several CFOs confirm our views on market penetration and on benefits to be captured from F&A offshoring,” he says. One factor which is fueling the demand for finance and accounting (F&A) business process outsourcing (BPO) solutions is that companies are striving to improve their financial transparency, comply with various regulations, and manage costs while focusing on core competencies.
A greater emphasis on compliance—a fallout from Sarbanes-Oxley and other regulatory measures—is leading finance leaders to consider outsourcing in ways like never before. Facing a shortage in skilled tax expertise, many companies have found that the most expedient way of ensuring compliance is to outsource. OPI has been quick to take advantage of this trend. “While earlier cost savings was the driving factor for companies to outsource, today cost is taking a backseat to capacity and knowledge needs,” notes Mirchandani.Though businesses and CPA firms are struggling to find able bodies to perform these functions, Mirchandani boasts of deep knowledge that they’ve cultivated among employees at OPI.
“And that’s a real value of tax outsourcing,” he notes. OPI has made sizable Investment to educate and train tax specialists in India. Employees are trained to tackle issues on myriad Fronts, spanning local, state and federal. Furthermore, they also have the skill sets to offer services such as payroll tax, sales tax, use tax, and many others. With 400 employees focused specifically on tax issues, OPI is one of the largest third-party tax compliance providers in India. Like tax compliance, for any finance function that OPI takes up, it applies continued process improvement methodologies. The company has developed a proprietary method known as the “90 Day Challenge” to continuously align improvement focus and performance.
The team at OPI regularly brainstorms on ideas to improve the effectiveness and efficiency of a process or operation. OPI identifies value-added improvements that can be brought into a process. “The client’s tend to gain from the improvement in business processes and performance,” says Mirchandani. OPI promises improved efficiencies for its client’s at three levels— the resource level, the process level and at the organizational level.
When a client outsources to OPI, professionals at OPI will work to consolidate disparate processes, sometimes resulting in the creation of a central shared service centre. In this way, unnecessary redundancies are eliminated and processes can be standardized across the company. Similarly, at the process level, OPI professionals work to streamline/ re-engineer processes or those with significant bottlenecks. At the resource level, companies benefit from integrating OPI professionals into their processes, which allows for longer work cycles and thus faster turnaround times.
“Consider the possibility of receiving your consolidated financial statements a day earlier. The impact can be huge!” quips Mirchandani. Continuous improvement is difficult to achieve in-house, but it has become a central focus for outsourcing. “Without the influx of new ideas, complacency can set in. And, truthfully, change management efforts can be daunting in large companies. With outsourcing, companies gain access to professionals with the necessary skill set and perspective to identify areas for improvement on a regular and ongoing basis and to manage the change process,” adds Mirchandani FAO adoption is on the rise across all major verticals given the favorable industry dynamics.
To gain quicker access into a deal, OPI adopts an onsite-offshore model that allows its client’s to enjoy the benefits of a highly-skilled, lower-cost offshore workforce without compromising corporate knowledge, internal control, or increasing risks. Typically 20 to 40 percent of the total personnel originally performing the function at the client’s place become employees of OPI and remain onsite working at the client’s premises. These personnel are generally the same as those previously responsible for the function, which helps to maintain institutional knowledge.
These onsite professionals manage the day-to-day needs, exceptions, process improvements, change management, and all interactions with client executives and other departments. The rest of the work is performed by OPIs offshore team, where each person on the offshore team is entirely dedicated to that client. All communication with the offshore staff is handled directly by OPIs onsite staff. Client’s always have a direct onsite contact and never need to communicate with the offsite and offshore portion of the team. OPI has found that this model, in which organizations retain some of their in-house experts working alongside the vendor’s professionals, has become a preferred arrangement than all-out outsourcing. That puts FAO at a tipping point.
OPI is the successor to KPMG LLP’s national Business Process Outsourcing (BPO) division and itAccounts, an innovative finance and accounting business process outsourcing company started by Kishore Mirchandani. While OPI was formed in 2002 with the merger of the two companies, KPMG’s BPO group began outsourcing as early as 1997, and itAccounts brought to OPI a successful and established offshore F&A outsourcing facility in Bangalore, India.
Much of OPIs present directors and management team have worked as accounting firm partners and senior managers, or have large public company experience as CFOs and controllers. While the talent pool at OPI is a clear differentiator, it gives Mirchandani a conviction to stretch OPI within the FAO segment. “Even today, our professional services’ firm heritage remains a guiding part of who we are,” he notes. Over the years, the company has gained strength, with more and more CFOs buying the FAO transformation story.
The intense pressure to reduce transactional costs from within their own departments has forced CFOs to exploit the rich utilization of low-cost talent resources through globalization, and achieve greater manageability of their finance function across business units and geographies. Added to this, CFOs are watching their industry peers gaining a competitive advantage through FAO and hence follow suit to remain competitive. OPI, in this light, stands to gain. “Our FAO model has been built for the long haul. Our sustainability, coupled with educated customers, has proven a real draw. Adoption rates are up, and buying cycles are starting to compress; they are now less than six months and getting shorter each quarter. While most of our deals are sole sourced, we are attracting more RFPs than ever via sourcing advisors,” says Mirchnadani.