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In this part, we start with a quick overview of the new habits and impacts companies had to face during the pandemic and their plans for the coming years, according to 2021 GBS report analytics from Deloitte.
Everybody was impacted more or less and had to either work from home, or use more digital tools such as online conference tools, e-signature, e-invoicing, and whatnot. If your company is not in the digital sector, you probably have to cut your expenses, maybe revamp your business plans or work with an outsourcing provider, domestically, nearshore, or offshore, recruit from a different location, or even consider automation tools.
These are the greatest impacts on US companies’ plans for the next two to five years.
According to Deloitte’s report, 80% of the American Companies that made the choice of offshoring during the pandemic want to
keep their offshore operations. However, 20% don’t find any added value in offshoring mainly because of the quality and the control
over the resources. This shows that outsourcing offshore is still more than ever a solution that’s working well.
People living and working in North America are probably more familiar with the term shared service centers. Shared service centers are part of the company and work cross-business units, vs outsourcing that means working with a 3rd party.
On the left you can find the % response for the shared service center, and on the right the same for outsourcing services. From the perspective of the outsourcing company, we can say that it quite sticks to reality.
Functions such as HR, Procurement, or front office profiles are usually within the same country but tend to be outsourced more and more as well. Accounting and Finance, being the number one service line for us, also shows that Finance operations can be a struggle for some companies for a number of reasons. So they can focus more on their business activity, the also need to prioritize certain strategies.
Business rules/ processes
Lack of Efficiency
Lack of effectiveness
Late payments
Automation tools
Turnover/talent retention
Outsourcing
Data Analytics
Regulations
Cloud System
Process Automation
Artificial Intelligence
Fast growth sometimes precedes the scaling of processes
Most small and mid-sized companies in the US have been growing so quickly, and they have challenges with their processes.
They usually grew organically with its old processes. However, the old processes tend to fail at new scale.
One very good thing that they can do is to ask themselves a few questions:
Small and midsize companies do not have easy access to top accounting talent
The tight labor market today and lack of access to top accounting talent, especially in the US. The top accounting graduates from the top accounting program are looking to work for one of the top accounting firms, like KPMG, EY, PwC, or Deloitte.
It is hard for the controller or the CFO of a small and mid-sized company that is growing so fast to set up special recruiting budgets just to fill or backfill back-office staff.
Automatically, controllers and CFOs must focus on closing the books, basically. What ends up happening usually is that a staffing firm like accountants or Robert Half gets hired to find staff for these companies. But the reality is that the level of talent that is accessible through that avenue is not comparable to a top accounting firm. Turnover is high.
In addition to that, these staffing firms, they don’t provide you process optimization. They just fill a person in.
All the training, all the supervision, all the measurement of the performance of these employees is on you. They becomes your extra management burden.
Finally, if you find the recruited employee is not good enough, the backfill requires you to find another person, take another risk, take weeks or months to train them, and then you have to manage them.
That’s where Innovature comes in.
We bring you top talent, the bachelor’s degree, master’s degree level employees that you wouldn’t really have access to on the normal market if you were to try to hire them yourself.
We train them, we benchmark them, we train them against your other employees, against your processes.
And if they leave, we always have someone trained on the back end. So we’re able to backfill a person effectively where all you are worried about is knowing how many positions you have, and we enter and manage them, staff them, you name it.
Answer: Covid 19 has caused a lot of negative impacts to a lot of businesses in the last 2 years. However, with the outsourcing nature of work that our employees were already working
remotely to deliver work for our clients, we did not have a lot of difficulties adapting to the situation and were able to maintain service quality during the high peak Covid period thanks to our established IT infrastructure, security requirements and Company were able to provide all necessary computer equipment for employees to work remotely.
After Covid died down and everything started getting back to normal, like the situation of anywhere around the world, we had to deal with a staff turnover situation but the impact was just in a short period as we have a good training program using our internal e-learning system, we were able to stabilize our workforce very quickly. Also, we have put in place a formal hybrid work program that allows qualified employees or teams to work from home a maximum 4 days a week to increase employees’ commitment while still maintaining good service quality.
Question: Did you experience an increase in Q the number of inquiries received or growing attention towards Innovature in the last 2 years?
Answer: Covid 19 did force a lot of businesses to allow their employees to work remotely. Therefore, they started getting familiar with the
remote work concept. I have seen more
openness from clients to explore outsourcing solutions. Companies were trying to save costs that’s true, but also trying to find sustainable solutions to support their business operation and transformation.
In the last 2 years, the number of inquiries has increased significantly especially related to Accounting, Finance, Analytics functions, and IT system support.
What are your three priorities in working with an outsourcing provider?
Source: Statista 2022 – US Companies Outsourcing Locations
This map shows the top outsourcing locations Americans are considering:
2 years ago Vietnam was not in the top 10, but the country has gained the reputation in the global market. We believe Vietnam is one of the emerging markets foroutsourcing services, specifically in Accounting and Finance Services.
According to the General Statistics Office of Vietnam in 2022, the labor force aged 15 and above in Q2/2022 was 51.6 million people, an increase of more than 0.4 million people compared to Q1/2022 and increased by nearly 0.6 million people over the same period last year.
Among them, over 51% are between 15-39 years old, of which the age group between 15-29 years old accounts for 26.7%, and the age group between 15-24 years old accounts for nearly 15%.
This group is from 15 – 24 years old that have the potential of acquiring new knowledge and skills to improve the quality of labor workforce and productivity in Vietnam.
In addition, the data also shows that the percentage of trained workers with college and bachelor’s degrees in Q1/2022 is 26.1%. In Q2/2022, it is 26.2% which is 0.1% higher than the previous quarter and the same period last year. For a clearer overview, please have a look at the chart below.
Source: CareerBuilder Vietnam
Question: How is the trend of English skills and Computer proficiency of Vietnamese talent?
Indeed, the labor market and job have gradually become more exciting than ever – the door is widely opened for all candidates. According to a CareerBuilder survey, more than 50% of candidates reached the advanced level of English skills.
The percentages of advanced and native levels are growing year by year There is also a positive change in Computer proficiency. The percentages of advanced level defined as level 4-5 have always been growing by more than 50% in the past 3 years. The definition of levels is based on self-assessment of computer and office skills, not classified per which operating system used by candidates.
The percentages have reflected the importance of the skills toward job engagement.
Source: CareerBuilder Vietnam
Question: What are the strengths of Vietnam’s talent pool when compared to the labor workforces of other countries in the same region?
According to the Global Innovation Index 2021 (GII 2020), Vietnam continues to maintain its high ranking, Vietnam is leading among 34 low-middle-income countries and was ranked 10th in 17 countries in Southeast Asia, East Asia, and Oceania.
This reflects positively on the strength of applying science and technology of the Vietnamese workforce compared to other countries in the region, especially in science and technology innovation to create high-value
hi-tech products, as well as taking on most of the complex jobs in production and business that were previously taken by foreign experts.
In addition, another competitive advantage of the Vietnamese workforce comes from the high-tech workforce in the field of software business process outsourcing, Vietnam is currently in the Top 5 most attractive destinations for IT Outsourcing Services (According to AT Kearney), while Gartner rated Vietnam as a top IT outsourcing destination in Asia-Pacific.
Vietnam also ranks 9th in the Top 10 Digital Countries (According to Tholons).
See more» Vietnam’s labor market in 2022
Polling Results
Based on 99 attendees’ voting in the webinar
What are your main concerns with offshoring your operation to Vietnam?
Key lessons from Innovature BPO’s clients
We have a short interview with two of our clients in the US. We asked them the following questions:
” Our journey with Innovature has been a long one, as I mentioned, and it’s been really successful. We started out in really just a few roles in the Accounting and Finance base and we really branched out beyond that. We’ve entered into operations and analytics and a lot of that’s just because Innovature proved themselves to be able to handle the work, their staff provide high quality service.
And in many ways the staff at Innovature produce a work quality that’s identical to the work quality of our US staff. So I’d say we’ve had a very successful partnership with Innovature.
There are a lot of providers that couldn’t handle that kind of disruption without a service issue and that wasn’t true with Innovature and so we’re really happy about that.”
“It’s overall been a good journey. I will say that we absolutely would not be in the position where we are as a company and as an Accounting and Fnance Department without
Innovature’s assistance. We don’t really think about them as outsourced. We really try to think about them as our teammates that are within our department and embrace everything that they have to offer.
Training is crucial to getting the optimum capacity out of everybody.
Just about time it takes to complete tasks where the challenges are. Communication is absolutely key to making sure that everything runs smoothly, we’re able to meet deadlines and do things with a high degree of accuracy.”
Benchmarking is indeed important to create added value for your business. Most of the SMEs we talk to don’t have any benchmark or very little information to provide. One of the most popular reasons for this is the belief that they are their own organization, and hence, do not need to emulate any other organization.
Hence, when they are willing to make the transformation to their business because they want to scale up, because of a bear market, or with what happened with COVID-19, they are having a hard time assessing what they should outsource, retain, or automate. They have a rough idea but it’s still very blurry.
Benchmarking is a process to discover what is the best standard of performance seen in a specific department, company, by a particular competitor, or by a completely different industry.
See more»
Here is an example for the efficiency. You can see the suggested number of full-time employees in the accounting department in accordance to the company’s annual revenue.
Basically, it comes down to the volume of transactions. Although, a $20M company may have more transactions than a $100M firm. It depends on the complexity of the underlying business. So take those figures as an
example as they might not exactly apply to your company.
E.g Level of efficiency benchmark
Sources: https://www.iqbackoffice.com/ The 2021 McKinsey Global Payments Report
At Innovature BPO, we put in place this Service Model for the Accounting Services.
Our main difference is the fact that we have a consulting approach. We consider our client more like a partner to us. There are processes outsourced to us without training manuals, requirements or benchmarking.
As Innovature team takes over and operates, we document the process, set checklist requirements, and even come up with the operation benchmarking and continuously optimize the benchmark for clients.
For example, a certain process or task can take 20 hours per week originally, over time, we can cut down by 20 – 25% processing time. That’s the added value that I don’t think a lot of outsourcing suppliers can provide.
We sometimes faced that situation, everything will be clear in the contract, it would depend on the reason but usually a two to four-week period of notice depending on the reason.
We work on a project base or with dedicated teams. Usually, a period of 1 month is the minimum for customer services or telesales for instance. However for accounting and finance services we typically have adedicated team with a one-year contract that is renewed if you want to keep the team.
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