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On 5 October 2012 ACCA organised the roundtable “Finance transformation: shared services and outsourcing” that took place in Kyiv, Ukraine. More than 50 representatives of leading Ukrainian companies participated in the event.

ACCA has recently released its first report on finance transformation and the use of shared services and outsourcing, Finance transformation: expert insights on shared services and outsourcing.  The report is a first in a series of reports that supports ACCA’s broader programme on finance transformation through shared services and outsourcing. The roundtable event provided a platform for discussion and debate on the key issues identified in the report and provided leading businesses within the sector an opportunity to share their experiences on some of the issues raised.

Nataliya Vovchuk, Head of ACCA Ukraine, Baltic and Caucasus States, opened the roundtable with a welcome speech on global outsourcing and shared services. She presented the key findings from ACCA research, with the main message that there is no turning back from these services.

Nadiya Konovalenko, Director of Accounting, Compliance & Reporting at Ernst & Young Ukraine, shared her experience of setting up outsourcing business within Big Four companies. Her company provides all sorts of financial and accounting outsourcing, however these services are not company’s main business in Ukraine. Most of outsourcing clients come from global Ernst & Young contracts, where a client also has business in Ukraine.

Magdalena Patrzyk, Senior Manager of Tax and Legal Services at PricewaterhouseCoopers Ukraine, noted that her team uses tax compliance approach for outsourcing and shared service. Madgalena also confirmed that these are not the main services for her company in Ukraine, and most of such clients come from global agreements.

Olena Levshun, Partner and Practice Leader of Accounting outsourcing and financial management at EBS, noted that her company works with outsourcing since 2002 in Ukraine. According to Olena, the key country-specific characteristic of outsourcing business in Ukraine is high bureaucracy that requires continuous authorisation from client and therefore – continuous involvement of both parties.

Pavlo Boyko, Managing Partner of TMF Ukraine, remarked that there are over 40 people in his company doing purely outsourcing business in Ukraine. He noted that lower cost, taken narrowly as lower salary cost, is not the starting point of transformation, but rather its endpoint, realized in a wider perspective. Their clients often get unexpected benefits of better processes administration and changed attitude toward taxes.

Daniil Shash, General Director Ukraine of Intercomp Global Services, said that his company operates in Ukraine for 5 years now, starting with payroll and now doing different kinds of outsourcing. He also concluded that the paper’s finding of cost being the starting point of transformation does not apply to Ukraine. While the cost of an outsourced specialist is generally at the same level or even higher than the cost of an in-house accountant, companies still use outsourcing for such benefits as process improvement, information consolidation and better IT infrastructure.

Experts named the largest hindrances for financial transformation to be client’s slackness for cooperation, procurement of low fees that drive lower scope of outsourcing, shadow organisations that mask their activities, growth in client’s operations that requires re-negotiation of contractual provisions, problems with communication and lack of understanding of who is the decision maker within the client company.

Client’s preparation for transformation plays an important role. The retained finance team should be communicated of its future, in order to facilitate cooperation and information sharing. It is important to see the continuity of processes, to foresee future changes from clients. When preparing a foreign client, it is important to explain Ukrainian realities, laws and business practices, as well as to educate on local accounting and tax risks. Client’s standardised processes and high corporate culture are helpful for outsourcing provider.

Experts agreed that provider’s personnel should be prepared to have necessary communication and interpersonal skills, on top of deep accounting and finance knowledge. This can be achieved by thorough selection of outsourcing team, carrying out debates to teach efficient expression of thought and staff involvement in high-level negotiations to teach communication with clients.

Finally experts underlined that Ukrainian accountancy function should not be fully transferred to overseas outsourcing and shared services, due to local tax complication and frequent legislative changes. There always has to be local specialist who would monitor legislative changes and update the provider on necessary amendments to existing model if necessary.

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