The concept of Shared Services Companies (SSC) is not new; however, the rise in domain expertise combined with modern technologies have helped them evolve from mere transactional offices into strategic value centers. Market volatility, uncertainty, complexity, and ambiguity are some of the factors forcing SSCs to pivot their business models to buffer them from future shocks. Today, more and more SSCs are moving into a Global Business Services (GBS) model serving multiple locations across multiple functions, often reporting directly to global CXOs or Boards of Directors of companies. This highlights the dependency on these centers for cost optimization, process efficiencies and standardization, and large-scale digital transformation. Setting up a Finance Center of Excellence (COE) might just be the solution to these burgeoning realities.
The benefits of setting up a Finance COE percolates to the entire organization. Process standardization has a direct impact on bottom-line growth; digital adoption allows for capability arbitrage; and first-party data and insights can be leveraged across functions to provide elevated customer experiences. But most importantly through sound Financial Planning & Compliance, Finance SSCs empower organizational scalability. Setting up a Finance COE is no longer a question of why, it’s a question of how and where.
India offers both existing and upcoming COEs the dual advantage of the availability of high-skilled talent and technology infrastructure to ramp up their capabilities quickly. With 440+ Finance Shared Services COEs employing over 700,000 people across multiple Tier 1 and 2 cities, India is a gold mine for global organizations.
Zinnov Research highlights, that functions such as Financial Planning & Accounting (FP&A), and Risk & Compliance cannot be easily integrated with Technology, unlike functions such as General Accounting (GA), Process to Pay (P2P), and Order to Cash (O2C). What this signifies is that for global companies bullish about attaining high levels of maturity, there is a need to invest in domain experts through a Finance COE to conduct internal audits, mitigate reputational risks from non-compliance, and facilitate financial health planning via Cash Flow Analysis, Finance & Accounting Strategy, and Budget Forecasting. Augmenting that with a robust Technology stack that includes Intelligent Automation, Machine Learning, Cybersecurity, and Cloud Computing, and you have a recipe for competitive advantage.
Setting up a Finance COE comes with its fair share of concerns and challenges. These challenges include understanding value that can be extracted from these centers, measured in tangible metrics that align with business objectives. Additionally, finding and installing the right talent, Regulatory & Compliance issues across multiple geographies, and lack of budgetary allocations further impede the setup process. Therefore, working within an existing mature ecosystem is the best way to mitigate these challenges. Finance stands as the second most mature function within Indian GCCs. One-fourth of GCCs in India have already established more than one Finance COE to provide strategic support for global HQs, with a mature complex portfolio of finance functions driven out of these centers.
While BFSI and Software stand out as the most prominent industry verticals with Finance COEs in the region, the emergence of Finance centers across Pharmaceutical, Automotive, Telecom, and Industrial are proof that India provides capability and capacity arbitrage for companies for Finance related functions.
The report provides an in-depth analysis of the existing Finance COE landscape, extracting insights from use cases. It deep dives into the value chain of Finance work portfolios, identifying key technology and skill stacks required for each function, supported by anecdotal evidence from case studies. Addressing bottlenecks and friction points, the report also provides recommendations to both CFOs (from a skills angle) and organizations (from an agility angle), leapfrogging their growth from pure-play shared services to high maturity GBS.