ATKearney FDI Confidence Index

Key takeaways from the ATKearney FDI Confidence Index 2005:

  • India joins China at the center of the FDI radar screen. It also replaces the US as the 2nd most attractive FDI location.
  • China dwarfs India in FDI, partly because China attracts more capital-intensive functions.
  • Investor enthusiasm for China and India is at an all-time high.
  • FDI prospects dim for Western Europe.
  • Investment confidence soars for Eastern Europe.
  • IT and contact centers remain the highest areas for corporate offshoring.
  • Investors see diminished Macro risks, but growing Micro risks.

Finance outsourcing in the high-tech and electronics industries

Key Findings of an Accenture-sponsored survey conducted by the EIU looking into trends, risks and opportunities associated with finance outsourcing in the high-tech and electronics industries:

  • Finance is among the most outsourced functions.
  • Finance being outsourced by small and large firms at differing rates.
  • Executives are satisfied with outsourcing arrangements.
  • Barriers to increased finance outsourcing exist.

What are the primary benefits / objectives of outsourcing the Finance function?

  • sharper focus on core competencies
  • lower costs.

If you do not outsource finance and accounting functions but you do outsource in other areas of your business, please indicate why the finance function has not yet shifted to this model.
The finance functions are considered too critical tobe outsourced (54%)

What will be the primary drivers behind the increasing use of finance outsourcing in your industry?

  • Improved quality of service from outsourcing providers (46%)
  • Pressure on costs (49%)

In your own organisation, what are the barriers that stand in the way of a decision to outsource finance functions?

  • Desire for greater direct control of finance functions (68%)
  • Cultural resistance to change (42%)

In your view, what are the 3 primary risks associated with finance outsourcing?

  • Risk that quality of service is inadequate (63%)
  • Risk that in-house knowledge and expertise erodes beyond repair (42%)
  • Risk of breaches of data security (41%)

Potential disruptors to IT and Business

Here are my ideas of the the potential long-term disruptors to our way of doing business:

1. Software as a Service (SaaS):
SaaS is increasingly gaining momentum with Small and Medium Businesses. The Economist recently had a wonderful article on SaaS.

2. The other threat is from what I like to call “smartsourcing” – a concept where companies outsource to freelancing individuals who are the best in their particular domain. One just needs to see sites like elance.com to get an idea of how this might shape up. It is akin to a movie studio where the best producers, directors and artistes come together for a “project” – they are not employees of the studio, rather just collaborators working towards a common aim.