AB Outsourcing supplement – 2014

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THE MAGAZINE FOR FINANCE PROFESSIONALS

BRIGHT FUTUREOUTSOURCING DELIVERS RESULTS

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ACCOUNTING AND BUSINESS IRELAND Special Edition - Outsourcing Focus 2014

ACCOUNTING AND BUSINESS IRELANDSPECIAL EDITION - OUTSOURCING FOCUS 2014

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2 CONTENTS

ACCOUNTING AND BUSINESS

CONTENTS3 The view from Crevan Higgins and snapshot on outsourcing

4 The future is bright according to Capita Asset Services

6 Improving efficiencies Microsoft and Accenture’s partnership led

to standardised processes

9 Outsourcing for SMEs The decision to entrust an external body

with key business processes is not one to take lightly

11 Outsourcing in the public service The Public Service Reform

Plan contains a number of actions to drive alternative models of

service delivery

13 BPO - opportunities for growth The Irish BPO sector has grown

significantly in the past five years

14 Realising effective outsourcing Models for US companies

Laura Coughlan FCCA Business Development ManagerOutsourcing and Shared Services ContactACCA Ireland 9 Leeson Park Dublin 6T: + 353 (0)1 4988 914 [email protected]

My role in Certus centres on the delivery of robust financial analysis and insight to the business through the full business cycle. It’s very much a ‘value add’ role in assessing new business opportunities, forecasting and planning, pricing for new business, reporting on business performance as well as identifying ways to enhance income opportunities. This is backed up by robust financial performance data, delivered through a combination of strong systems and a solid relationship with other business areas.

As clients increasingly adapt to an outsourced environment, they expect more than a replacement of existing services in a more cost- or performance-efficient way. They look to us to proactively deliver added value to their business model. Those outsourcers that stand still and do not look beyond current practice will be passed by their competitors or, indeed, will lose clients who seek innovation and efficiencies as they drive their own businesses forward.

As a three-year-old business, we are still relatively new to outsourcing; however, it’s fair to say that the business has adapted extremely well to the challenges presented by this sector, and continues to evolve to the changing needs of our clients and the market. For a number of our clients, this also is a relatively new world, and their needs and expectations, from us, continue to evolve as they better understand the possibilities they can derive through outsourcing.

‘ The business has adapTed exTremely well To The challenges presenTed by This secTor and conTinues To evolve To The changing needs of our clienTs and The markeT.’ crevan higgins, financial conTroller aT cerTus

Recently, we have begun to focus more on measuring the impact of what services we offer to existing or new customers. How we identify these opportunities and measure them is vital to any growing business and directly influences the shape of the future business. We are constantly seeking new

opportunities and actively encourage innovation from within the business.

A key challenge for 2014 will be the smooth integration of new contracts, while continuing to look for further opportunities to generate revenue streams from either existing clients or new business. As a finance unit, we continue to shift the focus of our planning, performance reporting and partnering to reflect the relative impact of the changes that this new business brings.

The most important thing that I have learnt over the last few years is never to take anything for granted. Possibilities are endless, and only limited by either lack of imagination or the energy to both pursue and develop new ideas. It’s so important to enjoy what you do and maintain a hunger to add value to everything that you do… that’s what makes us succeed.

When I’m not working, I like to spend time with my family who, it’s fair to say, do not see enough of me during the week. I generally start off the day with a 6.30am visit to the gym. I find my love of kickboxing great for unwinding. ■

snapshoT:ouTsourcing

Ireland’s unemployment rate has dropped to 12.5%, according to the latest figures from the Central Statistics Office. It’s the lowest in three and a half years. Much of Ireland’s road to recovery from recession has been thanks to a shift towards service provision.

The construction boom is long gone, and in the fields of pharmaceuticals and IT, giants such as Pfizer and Intel are still at large in Ireland. However, snapping at the heels of the pharmaceutical and IT industries are the services and outsourcing sectors.

Many larger companies, including banks, have used outsourcing as a means of reducing overheads. Ireland, in turn, has built a reputation as a worldwide leader in providing quality services, which are the foundations of the outsourcing sector.

As the outsourcing industry continues to evolve, Ireland must build on its current reputation as being one of the top five locations in the world for business services investments.

Outsourcing delivers tangible and measurable results. If Ireland is to build a world-leading reputation as a hub for outsourcing, it must ensure its young, trained and educated workforce is a key part of this.

The view from

19corporaTe | secTor

accounTing and business

3

The ‘future is bright’ for outsourcing in Ireland Ireland was recently named as one of the top locations in the world for business services investments, writes Siobhan Farragher, Capita Asset Services

▲ fire and water Fireworks on River Liffey

CORPORATE | OUTSOURCING

ACCOUNTING ANd BUSINESS

Each year, more and more organisations are outsourcing a growing range of activities to third-party service providers within the same jurisdiction. In Tholans 2013 Top 100 Outsourcing Destinations, Ireland was ranked ninth in the world, and was the highest-ranked European country.

Since the industrial revolution, businesses have been challenged as to how they can exploit their competitive advantage to increase their markets and their profits. To this end, many large companies developed a strategy of focusing on their core business, identifying critical processes and deciding which could be outsourced.

Traditionally, companies’ efforts to attain these advantages were confined to simply ‘offshoring’ elements of their business that could benefit from the significant labour cost savings such strategies achieved, by moving these elements to developing countries such as India. While the ceding of control of these processes

may not automatically sit well with European corporate

strategy, such offshore

outsourcing did enable them to develop an awareness of the greater potential of outsourcing to third-party service providers in the same jurisdiction. Business Process Outsourcing (BPO) proved to deliver results, for many companies.

In BPO, an entire business function is provided by a third party – including process expertise, technology, operations and support. A flexible, committed outsourcing partner can transform and manage existing services and bring tangible and measurable service improvements. Outsourcing is an enabler to enhance service efficiency, quality and flexibility to increase customer satisfaction and loyalty – and all at an agreed cost.

Trends and future developmentThe outsourcing industry continues to evolve, both globally and in Ireland, with continued growth in IT, financial services and business process outsourcing. A government-sponsored marketing campaign touts the Irish labour force’s ability to work at all levels of the business process, from factory floor to executive suite. It highlights Ireland’s

success at becoming a knowledge-based economy.

Capita Asset Services anticipates great growth opportunities in Ireland with a target focus in the following areas:

* Public-sector outsourcing: predicted as a key growth area due to increasing pressure on governments to control spiralling costs and inefficiencies. The July 2009 McCarthy Report on public-sector expenditure recommended outsourcing as one method of achieving these objectives, and its use was acknowledged in the Public Service Agreement 2010-2014.

* Financial services outsourcing: activity in this area has always been high in Ireland and, given the current economic pressures on the financial services sector and potential cost savings offered by outsourcing, it is set to continue. Market research indicates that many outsourcing decisions may have been put on hold in the more turbulent financial climate of 2008/09 and are likely to come on stream again from 2012 onwards.

* Multisourcing: as the outsourcing market increases in sophistication, it is becoming more common for Irish businesses to divide different aspects of a single process or activity between multiple providers to diversify risk, reduce costs and access best-of- breed suppliers. ■

Siobhan Farragher is director of debt solutions, Capita Asset

Services, Maynooth, Ireland

OUTSOURCING | CORPORATE


4

Each year, more and more organisations are outsourcing a growing range of activities to third-party service providers within the same jurisdiction. In Tholans 2013 Top 100 Outsourcing Destinations, Ireland was ranked ninth in the world, and was the highest-ranked European country.

Since the industrial revolution, businesses have been challenged as to how they can exploit their competitive advantage to increase their markets and their profits. To this end, many large companies developed a strategy of focusing on their core business, identifying critical processes and deciding which could be outsourced.

Traditionally, companies’ efforts to attain these advantages were confined to simply ‘offshoring’ elements of their business that could benefit from the significant labour cost savings such strategies achieved, by moving these elements to developing countries such as India. While the ceding of control of these processes

may not automatically sit well with European corporate

strategy, such offshore

outsourcing did enable them to develop an awareness of the greater potential of outsourcing to third-party service providers in the same jurisdiction. Business Process Outsourcing (BPO) proved to deliver results, for many companies.

In BPO, an entire business function is provided by a third party – including process expertise, technology, operations and support. A flexible, committed outsourcing partner can transform and manage existing services and bring tangible and measurable service improvements. Outsourcing is an enabler to enhance service efficiency, quality and flexibility to increase customer satisfaction and loyalty – and all at an agreed cost.

Trends and future developmentThe outsourcing industry continues to evolve, both globally and in Ireland, with continued growth in IT, financial services and business process outsourcing. A government-sponsored marketing campaign touts the Irish labour force’s ability to work at all levels of the business process, from factory floor to executive suite. It highlights Ireland’s

success at becoming a knowledge-based economy.

Capita Asset Services anticipates great growth opportunities in Ireland with a target focus in the following areas:

* Public-sector outsourcing: predicted as a key growth area due to increasing pressure on governments to control spiralling costs and inefficiencies. The July 2009 McCarthy Report on public-sector expenditure recommended outsourcing as one method of achieving these objectives, and its use was acknowledged in the Public Service Agreement 2010-2014.

* Financial services outsourcing: activity in this area has always been high in Ireland and, given the current economic pressures on the financial services sector and potential cost savings offered by outsourcing, it is set to continue. Market research indicates that many outsourcing decisions may have been put on hold in the more turbulent financial climate of 2008/09 and are likely to come on stream again from 2012 onwards.

* Multisourcing: as the outsourcing market increases in sophistication, it is becoming more common for Irish businesses to divide different aspects of a single process or activity between multiple providers to diversify risk, reduce costs and access best-of- breed suppliers. ■

Siobhan Farragher is director of debt solutions, Capita Asset

Services, Maynooth, Ireland



5

Improving efficienciesMicrosoft’s award-winning outsourcing initiative with Accenture has cut its finance operating costs by over a third, thanks to a solid partnership between the two companies

In taking the decision to outsource, Microsoft’s main aim was to create a world-class financial organisation. It felt a BPO model would be the best way of achieving this, allowing experts outside the organisation to handle functions that weren’t necessarily core to its operations.

‘We wanted to create a high-performance global financial organisation and, while cost savings were included in the business case, we were also focused on improving services, increasing compliance and, importantly, freeing up employees to focus on more strategic activities. We looked for a partner that could transform processes across our

operations and we felt Accenture had the best domain expertise as well as the global scale,’ says Alan Byrne, EMEA, Americas service delivery director.

One teamBoth parties claim that one of the main reasons for the project’s success is down to the partnership approach; the two companies operate by a mantra of ‘together’ and actually coined the project OneFinance to reflect their commitment in this regard.

‘We are married,’ says Byrne. ‘We have to work together because together we own the delivery and together we own any problems. I think the concept of together drives a lot of the success we have.’

Microsoft and Accenture set up a mirrored governance structure, meaning that everyone has a counterpart in the other organisation. The mirrored structure facilitates effective communication and conflict

Six years ago, Microsoft partnered with Accenture to standardise processes for its finance, accounting and procurement functions globally, with the aim of improving efficiencies.

From its genesis in Ireland, this award-winning business process outsourcing (BPO) initiative – called OneFinance – has become one of the biggest in the world, spanning 105 countries and has been lauded at home and abroad for its transformational approach to outsourcing.

Accenture’s relationship with Microsoft in Ireland dates back 25 years and, today, employees are directly involved in Microsoft projects across its European Operations Centre

in Dublin. Given the longevity of the relationship here, it’s probably not surprising that Ireland is the location from which one of the world’s largest BPO initiatives was developed.

Back in 2006, Microsoft set out with an ambitious goal to standardise its finance, accounting and procurement functions globally, with aims to reduce costs and complexity, improve services and compliance, and focus internal roles on more strategic activities.

To assist with this, Microsoft partnered with Accenture and, within the first 18 months, the partnership designed and implemented a global set of standardised processes across 92 countries, delivered a reduction of 35% in finance operating costs and cut the time and resources spent by Microsoft controllers on transactional activities and compliance from 75% to 23%.

Today, the contract spans 105 countries with over 35 languages, and services more than 110 Microsoft subsidiaries from delivery centres located around the world.

▌▌▌In DublIn, the entIre workforce eIther holDs A professIonAl quAlIfIcAtIon, such As AccA, or Is workIng towArDs one

resolution at the lowest possible level.The organisation structure is divided

along two main focus areas. The team that ‘manages for today’ is focused on the daily delivery of the service, while the team that ‘manages for tomorrow’ drives change for the future.

Career of choiceAnother major reason for the success of OneFinance is the commitment to attracting, retaining and motivating talent. One manifestation of this commitment is training and development, something that Accenture’s Dublin team is particularly proud of.

‘We promote and support a culture of learning and study; be that formal education or practical experience. As such we strongly commit to developing our team through the provision of time and financial subsidy to pursue professional exams, supporting them in gaining qualifications and career development and opening up new opportunities across the company,’ says Andrew Cheung, OneFinance managing director, Accenture.

In Dublin, the entire workforce either holds a professional qualification, such as ACCA, or is in the process of gaining one. Accenture is also very supportive of graduate employment, offering young people the chance to build their career from scratch, working alongside experienced accountants as well as receiving sponsored education.

What’s more, employees – and ultimately Microsoft – benefit from the fact that Accenture’s BPO operation sits alongside the company’s global shared service centre in Dublin, giving them the opportunity to gain experience and expertise in both operations.

‘There’s no doubt that our success is down to our people. Both graduates and experienced hires have been attracted to pursue a career path with us because they get a window to the world from a desk in Dublin,’ adds Cheung.

corporAte | outsourcIng

AccountIng AnD busIness

6

Improving efficienciesMicrosoft’s award-winning outsourcing initiative with Accenture has cut its finance operating costs by over a third, thanks to a solid partnership between the two companies

In taking the decision to outsource, Microsoft’s main aim was to create a world-class financial organisation. It felt a BPO model would be the best way of achieving this, allowing experts outside the organisation to handle functions that weren’t necessarily core to its operations.

‘We wanted to create a high-performance global financial organisation and, while cost savings were included in the business case, we were also focused on improving services, increasing compliance and, importantly, freeing up employees to focus on more strategic activities. We looked for a partner that could transform processes across our

operations and we felt Accenture had the best domain expertise as well as the global scale,’ says Alan Byrne, EMEA, Americas service delivery director.

One teamBoth parties claim that one of the main reasons for the project’s success is down to the partnership approach; the two companies operate by a mantra of ‘together’ and actually coined the project OneFinance to reflect their commitment in this regard.

‘We are married,’ says Byrne. ‘We have to work together because together we own the delivery and together we own any problems. I think the concept of together drives a lot of the success we have.’

Microsoft and Accenture set up a mirrored governance structure, meaning that everyone has a counterpart in the other organisation. The mirrored structure facilitates effective communication and conflict

Six years ago, Microsoft partnered with Accenture to standardise processes for its finance, accounting and procurement functions globally, with the aim of improving efficiencies.

From its genesis in Ireland, this award-winning business process outsourcing (BPO) initiative – called OneFinance – has become one of the biggest in the world, spanning 105 countries and has been lauded at home and abroad for its transformational approach to outsourcing.

Accenture’s relationship with Microsoft in Ireland dates back 25 years and, today, employees are directly involved in Microsoft projects across its European Operations Centre

in Dublin. Given the longevity of the relationship here, it’s probably not surprising that Ireland is the location from which one of the world’s largest BPO initiatives was developed.

Back in 2006, Microsoft set out with an ambitious goal to standardise its finance, accounting and procurement functions globally, with aims to reduce costs and complexity, improve services and compliance, and focus internal roles on more strategic activities.

To assist with this, Microsoft partnered with Accenture and, within the first 18 months, the partnership designed and implemented a global set of standardised processes across 92 countries, delivered a reduction of 35% in finance operating costs and cut the time and resources spent by Microsoft controllers on transactional activities and compliance from 75% to 23%.

Today, the contract spans 105 countries with over 35 languages, and services more than 110 Microsoft subsidiaries from delivery centres located around the world.

▌▌▌In DublIn, the entIre workforce eIther holDs A professIonAl quAlIfIcAtIon, such As AccA, or Is workIng towArDs one

resolution at the lowest possible level.The organisation structure is divided

along two main focus areas. The team that ‘manages for today’ is focused on the daily delivery of the service, while the team that ‘manages for tomorrow’ drives change for the future.

Career of choiceAnother major reason for the success of OneFinance is the commitment to attracting, retaining and motivating talent. One manifestation of this commitment is training and development, something that Accenture’s Dublin team is particularly proud of.

‘We promote and support a culture of learning and study; be that formal education or practical experience. As such we strongly commit to developing our team through the provision of time and financial subsidy to pursue professional exams, supporting them in gaining qualifications and career development and opening up new opportunities across the company,’ says Andrew Cheung, OneFinance managing director, Accenture.

In Dublin, the entire workforce either holds a professional qualification, such as ACCA, or is in the process of gaining one. Accenture is also very supportive of graduate employment, offering young people the chance to build their career from scratch, working alongside experienced accountants as well as receiving sponsored education.

What’s more, employees – and ultimately Microsoft – benefit from the fact that Accenture’s BPO operation sits alongside the company’s global shared service centre in Dublin, giving them the opportunity to gain experience and expertise in both operations.

‘There’s no doubt that our success is down to our people. Both graduates and experienced hires have been attracted to pursue a career path with us because they get a window to the world from a desk in Dublin,’ adds Cheung.

corporAte | outsourcIng


At a practical level, the OneFinance staff engagement strategy seeks to get the best out of employees. For example, a scheme called ‘we@Accenture’ rewards people for contributing ideas which result in process improvements or cost savings and there are also People Advocate Leads who champion people-focused programmes

to improve engagement across the workforce.

Transformational changeOngoing innovation is built into the project through an annual transformation programme and both companies have significantly invested in people and technology to make its processes leading edge.

Microsoft Dynamics is used across the board, but other software has been introduced specifically for OneFinance. For example, a controllers’ portal was developed in order to to provide insight into the financial processes operated by OneFinance. A governance workspace provides a dashboard into BPO service delivery and Microsoft governance. »

▲ talk the talk Taoiseach Enda Kenny, Microsoft founder Bill Gates and minister for foreign affairs Eamon Gilmore during Ireland’s presidency of the EU

outsourcIng | corporAte


7

Microsoft’s ability to deploy new processes is greatly enhanced through the outsourcing model and the project acts as a showcase for Microsoft technologies. The OneFinance ‘utility’ has allowed Microsoft to assimilate new business/functions in the model.

For example, when Microsoft acquired Skype in 2011, the company’s central processing allowed for a seamless integration of the other business, which wouldn’t have been possible otherwise.

Bigger pictureEvery year, Accenture and Microsoft agree the objectives of the BPO contract in the form of annual commitments or service level agreements (SLA). But they are also focused on the bigger picture, and not long after the original contract was signed, they realised the need to be more forward looking and jointly instigated a three-year vision to define the longer-term goals.

According to Accenture research, excellence in service level delivery is

one of the characteristics of high-performing BPO relationships; however, in longer-term arrangements, such as OneFinance, the provider seeks to go beyond ‘sea of green’ performance reports, to drive the right behaviours that matter most to the business.

‘Accenture has a responsibility to deliver on its contractual obligations in terms of SLAs, but we also put emphasis on making sure we drive the right end-to-end results. Microsoft cares more about Accenture resolving its service requests and issues than say, responding to an email in a given time period, so we are constantly re-examining our SLA,’ says Cheung.

Beyond SLAs, there are several other mechanisms in place which define the success of OneFinance. For example, customer satisfaction is measured through an annual financial controller and procurement community survey and in FY13, Accenture scored an 86% satisfaction rate.

There is also a continuous transformation programme, focussed on driving process improvements and step changes to the service operations.

To date, over 700 ideas have been logged by Accenture personnel.

Over and above delivery, the governance model is considered second to none. ‘Governance is the key. It doesn’t matter how good you are in delivery; if you don’t have good governance then your delivery will die out in a short time frame,’ says Byrne.

Both parties claim to have benefitted hugely from the OneFinance relationship and to date, the project has won 12 awards. Only this November, it was named Outsourcing Partnership of the Year at the Irish Contact Centre Service and Shared Services Awards 2013.

What’s more it is heralded far and wide as a best-in-class example of onshore BPO.

‘The OneFinance BPO arrangement with Accenture is truly different and sets the tone in Accenture and Microsoft. OneFinance is an excellent example of what a successful BPO operation looks like and is often one held up by other organisations as an example of what they should aspire to, so we are very proud of its success,’ says Byrne. ■

▲ tech city Dublin’s annual Web Summit highlights the city’s role as a technology hub


corporAte | outsourcIng8

* Engage with an outsource provider that can scale the services they provide to you as you grow.

Now you have considered the potential benefits and evaluated the criteria by which you will assess potential providers, the final key question is how much (or how little) to outsource.

Outsource optionsPayrollCompanies generally operate payroll as a standalone process and it can therefore be easily transferred to an outsource provider. Third-party providers will keep up to date with the often numerous changes in legislation, and the costs of staff training and systems maintenance will be borne by the provider. This is generally a cost-effective solution as it’s based on a cost per transaction. Also, it’s easily scalable as your company grows.Accounting/bookkeepingIt’s often difficult to employ resources in-house that exactly match your requirements and can be labour intensive and expensive with downtime during low-activity periods. It often involves high staff training costs, both ongoing and when introducing new systems.

Outsourcing provides access to a pool of skills not necessarily available in-house. The outsource provider’s experience of dealing with other clients in similar businesses can also be a benefit for best practice around processes/procedures/controls. Financial reportingUsing an outsource provider will free up management time used in the preparation of routine reports and instead give more time for review and interpretation of management information and any actions required.

An independent external provider that improves the quality of management reporting should provide enhanced assurance to stakeholders. It can assist in developing a more streamlined approach that will enable more timely reporting, while you can

benefit from use of the most up-to-date reporting tools and models. Tax and VAT complianceThe outsourcing of tax and VAT compliance replaces the requirement to have specialist compliance staff available in-house. The onus for preparing and filing of returns lies with the outsource provider, which can often heighten this priority and avoid unnecessary costs such as fines/penalties and interest on late payment. Engaging an outsource provider with VAT/tax expertise can bring significant cost savings to a company looking to grow their business, eg international

tax/VAT compliance (domestic, European Union and outside EU); transfer pricing; research and development tax credits etc. This has obvious advantages when companies are looking to manage their compliance obligations for VAT and other taxes across multi-jurisdictions when doing business outside Ireland. ■

Stewart Dunne is partner and head of outsourcing, BDO Ireland. BDO is a leading provider of high-value outsourcing services to both Irish SMEs and some of the world’s leading companies

OuTSOurcIng | cOrpOraTE

accOunTIng anD BuSInESS

10

Service delivery in the public sectorAn increasing number of public services are being delivered externally, a trend that is set to increase thanks to the Public Service Reform Plan, as Kevin Daly explains

programmes and outsource, where appropriate, non-critical functions. It also makes a commitment that the government will open up the delivery of public services to a range of providers.

In June 2012, an external service delivery unit was established within the reform and delivery office in the Department of Public Expenditure and Reform to lead on outsourcing initiatives across the public service. In 2012, the government also decided that all new services must first be tested for external delivery before any approval to deliver the service internally will be granted.

The term ‘external service delivery’ covers a number of different sourcing models where external assistance

The Public Service Reform Plan contains a number of actions to drive alternative models of service delivery, including outsourcing, across the public service.

These actions are increasing efficiency, improving customer service, promoting innovation and allowing public servants to focus on delivering core activities. Although the level of outsourcing of public services is not as high as some other OECD countries, there are already a significant number of public services being delivered by the private and voluntary sectors, with more under way.

The current programme for government contains commitments to identify and eliminate non-priority

▲ new approachThe DSP plans to use outsourced providers of employment services to deliver the new Jobpath programme to assist the long-term unemployed

is used to help deliver a service. These models include insourcing, cosourcing and outsourcing. These models range from basic managed services, through parallel private sector delivery through to full outsourcing of services to third parties. These can include not only private enterprises and voluntary organisations but also less common structures such as mutuals, social enterprises and joint ventures. In all cases government is still accountable for the delivery of the service as the contracting authority. The Public Service Reform Plan contains commitments to strengthen commercial capability across government and consider alternative sourcing models.

coRPoRAte | outSouRcing

Accounting And BuSineSS

11

External service delivery decisions within the public service are not based on any ideologies vis-à-vis the merits of the private sector versus the public service or vice versa. Instead, a pragmatic, evidence-based approach is being taken to these decisions. The public service acknowledges the risks involved with outsourcing and our approach is to manage these risks rather than avoid them. There is also growing acceptance of the potential benefits, including:

* cost and efficiency savings arising from better work and management practices and from enhanced performance measurement;

* greater potential for innovation in business practices through access to a wider set of skills, knowledge and technologies;

* improved services by having specialist suppliers focus on a function which may be non-core for the public service; and

* the external delivery of peripheral services also provides an opportunity for greater focus of scarce resources on core activities.

Prior to the Public Service Reform Plan being published in 2011, a wide range of government services were already being delivered in partnership with private sector providers. Notable examples include eFlow, the National Roads Authority’s toll operation on the M50 motorway; the Bovine Traceability System used by the Department of Agriculture, Food and the Marine; and the HSE outsourcing of some facilities management (including portering, catering, security, cleaning and linen) services.

Although much of the focus is on central government and its agencies, outsourcing has been used extensively in local government. The sector has already seen significant change, has lost large numbers of staff and has been forced to do things differently. High-profile outsourcing initiatives have included projects such as the municipal waste collection in Dublin City Council area. Other outsourced activities in the local government sector include facilities, accommodation, security and cleaning; environmental protection (testing, inspections, enforcement etc); household charge; and maintenance (including vehicles, public lighting and traffic lights). The

▌▌▌the SectoR hAS Seen SignificAnt chAnge, hAS loSt lARge numBeRS of StAff And hAS Been foRced to do thingS diffeRently

experience with these initiatives shows that partnership with the private sector can deliver positive outcomes for all participants, including the state and the general public.

Non-commercial state bodies, such as National Roads Authority, National Transport Authority, the Personal Injuries Assessment Board, the Railway Procurement Agency and the National Development Finance Agency are also recognised as being particularly strong in outsourcing and contract management. For example, the NTA has a core of around 80 staff and manages approximately 30 outsourced contracts. In recent years, An Bord Pleanála, Environmental Protection Agency, the Housing Finance Agency, the Private Residential Tenancies Board, the Companies Registration Office, Health Information and Quality Authority, the Food Safety Authority of Ireland, the Road Safety Authority, the National Standards Authority of

Ireland, the National Consumer Agency, Failte Ireland and CORU have all implemented significant outsourcing initiatives. In central government, Revenue successfully outsourced the Local Property Tax call centre in 2013 within a very challenging timeframe.

Several public service bodies are currently in the midst of outsourcing projects. A brief sample includes:

* The Department of Social Protection (DSP) – labour market activation (Jobpath). DSP will use a new form of service delivery when it rolls out Jobpath, a new approach to assisting the long-term unemployed to find work. The department will contract private/third-party providers of employment services to complement DSP’s existing public employment service and community-based local employment services. This will provide new and additional support to target long-term unemployment. Jobpath will operate on a payment-by-results basis, thus incentivising providers to find work for the maximum number

of long-term unemployed people.

* Central Statistics Office (CSO) – quarterly national household survey call centre. The CSO is currently examining the option of engaging an outsourced call centre to conduct telephone interviews as part of the quarterly national household survey.

* Health and Safety Authority (HSA) – finance function. The HSA is currently concluding a competitive dialogue process to outsource its entire finance function to a third-party provider.

* The Department of Social Protection (DSP) – contracting medical services. The DSP is contracting providers of medical services to supplement DSP’s existing medical review and assessment service capacity.

* Multiple bodies – debt management. There are currently a wide variety of public service bodies collecting receipts (such as fees, charges,

rents, fines and overpayments) from various organisations and individuals. In most cases, each individual body carries out these collection functions, including pursuing arrears and bad debts, in-house. The processes surrounding the recovery of monies, which have not been paid by their due date, have been reviewed and several bodies are now considering which elements of this function can be outsourced to the private sector.

While a large number of functions have been outsourced by the public service over the past decade, particularly in the non-commercial agencies and in local government, there is room for more to be done. A key strategy over the coming years will be to use skills in the wider public service to help the civil service to deliver more successful outsourcing projects. ■

Kevin Daly is responsible for outsourcing priorities with the Department of Public Expenditure and Reform

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Realising effective outsourcingOutsourcing can provide greater organisation efficiency at lower costs, with many companies outsourcing human resources and accounting, writes Brian Harrison

This trend has emerged in recent years as global companies have adapted their business models to focus solely on doing what they do best. This is the same for Irish subsidiaries of US companies as it is for any other large company. Be they a pharmaceutical company or large software firm, the opportunity is the same: outsourcing can provide greater organisation efficiency at lower costs. Among many areas outsourced by US companies here are human resources, legal services and accounting.

The American Chamber of Commerce Ireland is the representative body for these companies and so supporting members to realise effective outsourcing models is among its priorities. To facilitate cross-sector networking, the American Chamber

An enduring strength of the Irish economy over recent decades has been that of foreign direct investment. Today, Ireland is home to more than 700 US companies, which account for over 26.5% of Ireland’s GDP. The impact of these companies is well understood, and the fact that they employ more than 115,000 people directly is a huge benefit to Ireland.

There are, however, many further benefits to Ireland from hosting world-class companies from industries too, such as ICT, online media, financial services and life sciences. In addition to the direct employment, US companies support many tens of thousands of jobs in a range of support industries, with many companies using outsourcing services to support their business.

has an established business process outsourcing forum comprising representatives of its member companies. The forum provides an in-camera opportunity to exchange views and discuss challenges with peers within US multinationals in Ireland.

The chamber’s group has dealt with matters such as business partner relationships and metrics. One constant focus is managing quality control and compliance with outsourced suppliers. The group continues to engage with many other outsourcing-related topics such as benchmarks, structure and governance and transactional, FTE, hybrid models. ■

Brian Harrison, American Chamber of Commerce

▼ US TALKSIreland’s taoiseach Enda Kenny speaks to the Irish Business Organisation in New York



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Realising effective outsourcingOutsourcing can provide greater organisation efficiency at lower costs, with many companies outsourcing human resources and accounting, writes Brian Harrison

This trend has emerged in recent years as global companies have adapted their business models to focus solely on doing what they do best. This is the same for Irish subsidiaries of US companies as it is for any other large company. Be they a pharmaceutical company or large software firm, the opportunity is the same: outsourcing can provide greater organisation efficiency at lower costs. Among many areas outsourced by US companies here are human resources, legal services and accounting.

The American Chamber of Commerce Ireland is the representative body for these companies and so supporting members to realise effective outsourcing models is among its priorities. To facilitate cross-sector networking, the American Chamber

An enduring strength of the Irish economy over recent decades has been that of foreign direct investment. Today, Ireland is home to more than 700 US companies, which account for over 26.5% of Ireland’s GDP. The impact of these companies is well understood, and the fact that they employ more than 115,000 people directly is a huge benefit to Ireland.

There are, however, many further benefits to Ireland from hosting world-class companies from industries too, such as ICT, online media, financial services and life sciences. In addition to the direct employment, US companies support many tens of thousands of jobs in a range of support industries, with many companies using outsourcing services to support their business.

has an established business process outsourcing forum comprising representatives of its member companies. The forum provides an in-camera opportunity to exchange views and discuss challenges with peers within US multinationals in Ireland.

The chamber’s group has dealt with matters such as business partner relationships and metrics. One constant focus is managing quality control and compliance with outsourced suppliers. The group continues to engage with many other outsourcing-related topics such as benchmarks, structure and governance and transactional, FTE, hybrid models. ■

Brian Harrison, American Chamber of Commerce

▼ US TALKSIreland’s taoiseach Enda Kenny speaks to the Irish Business Organisation in New York



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THE MAGAZINE FOR FINANCE PROFESSIONALS

BRIGHT FUTUREOUTSOURCING DELIVERS RESULTS

ACCOUNTING AND BUSINESS IRELAND Special Edition - Outsourcing Focus 2014

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AB Outsourcing supplement – 2014

Documents

Transcript of AB Outsourcing supplement – 2014