5 Reasons Finance Outsourcing Works!

This blog was submitted by: Russ Harju

It’s 2019, 12 years after the “The 4-Hour Workweek” popularized outsourcing. Yet so many companies are still not enjoying the benefits of outsourced freelance talent, especially talent overseas. Perhaps that is based on unawareness of the capability or fear of having a bad experience. That’s valid! As with many new experiences, the first time probably won’t be perfect. However, by keeping EVERYTHING in house, Finance departments are missing out on the opportunity to increase their value to the business without increasing costs.

Here are five reasons why all companies need to seriously consider the outsourcing of tasks, both big and small.

#1 It’s cheaper

Isn’t every business looking for opportunities to run leaner and save costs? Here’s an example:

The average Senior-Financial Analyst (SFA) in the US earns $87,000 per year. Of course, after benefits and taxes,the total cost of compensation is probably close to $113,000. The average employee puts in 2,000 hours a year, giving you an hourly rate of $57.

By conducting a quick search for a data-visualization expert on a major freelance platform, I find good talent for$32 / hour. Even the very highly rated (and US-educated) individuals are available for $51 / hour. I have utilized the skills of both levels, depending on the difficulty and importance of the request, with great results.

#2 It frees up internal resources to think about strategy, not tasks

The counter to the cost savings argument is that the SFA’s salary is a sunk cost, and any outsourcing is a marginal expense. While this is true, an optimally sized finance department does not have staff looking for things to do. They’re already at full capacity. As leaders assess the value-add or short-term work that needs to be completed,it’s critical to consider the opportunity cost of those tasks, and what knowledge is vital for their success.

Not everything can be outsourced, but by clearing out the tasks that can be, my departments have been able to focus on what matters. By dividing and conquering, we are better able to deliver on the things that matter to the business, that only the Finance team can provide.

#3 It’s specialized

As analysts begin their career, they will naturally gravitate to developing expertise in specific technical areas.Perhaps that’s Excel, Tableau, Power BI, or their EPM system, etc. Analysts then change companies, or the company changes vendors. Learning the new system intricacies can be time-consuming and possibly incomplete. This is why having on-demand experts can be so beneficial.

In one department, the team had great expertise in Excel and EPM systems, but not much knowledge in their new tool,Power BI. The previously gained expertise was useful for getting an understanding of what good looked like, but the DAX coding knowledge required to make useful Power BI reports did not yet exist.

Internally they could have solved the problem with some hacks to produce something that was barely adequate. Instead,the company turned the basic data design and formula building efforts over to somebody with Power BI expertise overseas. This freelancer made the formulas much more efficient than would have been possible by somebody internal.

Additionally, it forced collaboration. If the work was completed internally, only one person would have looked at the job, until it was ready to be demonstrated. Instead, the employee was able to ensure this was produced according to company standards, and the contractor was able to point out best practices they had seen from their experience working with other companies. As the saying goes, two heads are better than one.

#4 Fast off the starting block

You would imagine that something better and cheaper must take longer to produce. It’s the opposite! Taking things internal can affect speed in two ways. First, due to the lack of existing specialized knowledge internally, companies must work through a learning curve. Secondly,even if they have qualified resources in-house, those resources probably have major bandwidth issues. By going outside, the company can skip past those hurdles.

The years of expertise that the consultant brought to the Power BI project I referenced before allowed the inevitable hiccups over data nuances to be worked through quickly. Also, the immediate availability of the contractor let the project start and continue with great focus, uninterpreted by meetings, and other regular required elements of employee life.

#5 Amazing pace for progress

While conceptually the world is flat, physically it is still round. This reality creates some fun to see overnight miracles. I have sent information to the freelance expert at the end of my workday and come back to the office the next morning with the work already completed. My team then had the whole day to review progress and submit feedback. The finance department is seemingly then working 24 hours a day! Creating time may seem impossible, but not once you discover the tricks to make it happen.

Outsourcing = Maximizing Value

In conclusion, to increase their value to the business Finance departments need to consider leveraging available freelance talents. Their partners will be amazed at what is accomplished when affordably leveraging the skill sets from around the world. In future posts, we’ll discuss the keys items required to make sure the outsourcing of projects is successful.