By Indira Kannan
Source:CNN-IBN News
Posted: May 3, 2006

New York: India's fast emerging as a key outsourcing destination for American companies.

That's because industry experts in the US say only five per cent of companies in the US believe their finance and accounting processes are specific to them.

And that's what's drawing them to the skilled labor pool in India.

As vendors and clients in the outsourcing business gathered at a meeting organized by The Conference Board in New York, one of the leading trends they heard about was in the Finance and Accounting (F&A) sector.

The Texas-based consulting firm Alsbridge believes over 40 per cent of businesses will evaluate F&A outsourcing this year, mostly for functions like accounts payable and collections.

India will be a favorite destination, with the main challenges being cultural rather than professional.

Says Managing Partner, Alsbridge, Ben Trowbridge says, "It's the slang that drives us crazy around the world. Once you get past cultural and language issues, the accounting piece - if you're following international accounting standards, like the GAAP - are close enough to train the difference and in fact move the work."

India is expected to get around 120,000 outsourced F&A jobs this year. But three quarters of this work is likely to be captive offshoring, staying with the parent company's Indian operations.

This ratio however is likely to change in a few years.

"In the end if you give it another 5-years, it's reasonable to bet that offshore captive centers will probably be sold to Indian companies," says Trowbridge.

Other major trends identified by Alsbridge for 2006 include improved margins for India-based outsourcing providers relative to their American counterparts; and possible mergers and acquisitions among the top Global Nine outsourcing providers.

Outsourcing will continue to seek Indian shores in large numbers, and in fact expand to more specialised and high-value sectors like finance and accounting, and engineering.