New York Outsourcing Summit

New Directions in Offshoring and Outsourcing in the Philippines

Finance and Accounting

Business Processing in the Philippines

September 27th 2007

© LogicaCMG 2006. All rights reserved

Finance and Accounting in the Philippines

Accounting and Industry Financial

Procurement Back Processing
Office

- Chevron Texaco, Shell, - AIG,Manulife, HSBC, JP

Deutsche Bank Morgan Chase

LogicaCMG BPO Concepts 2

Why Philippines?

• The Philippines has more than 100,000

licensed accountants
• Every year there are 3,000 CPAs
qualified
• Filipino accountants are well versed in
GAAP and International Accounting
standards used in the United States
• Good customer service mindset and
strong affinity with western culture

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What services are
offered?

LogicaCMG BPO Concepts 4

 F & A services
Finance and Accounting services
Accounting and business support
Services typically
retained in-house Financial planning
Planning services
Services
Accounts payable
Payable
Accounts receivable
Treasury and cash management
General accounting
Reporting
Help desk/
customer
management
call logging, resolution,
incident reporting, outbound
calling
Financial analysis, accounting support, change governance,
project accounting, audits
Budgeting and financial planning, forecasting
Invoice processing, credit note processing, payment
processing, supplier administration, payroll service,
expense management, project specific accounting &
reporting
Customer invoice processing, cash application, credit &
collections
Payment management, cheque processing, receipt
allocations, standing order mandate, bank reconciliation
General ledger, inter/intra company, fixed assets, financial
reconciliations, monthly/ quarterly/ annual close
VAT reporting, management reporting, statutory & reporting,
performance management
Document Systems support F&A shared service
management ERP and other system management
total invoice management support & maintenance commercial, HR,
(scanning invoices, OCR, liaison with vendor Service improvement,
workflow), printing & posting report development client management,
AR invoices & AP remittances, service management, training
cheques
LogicaCMG BPO Concepts 5
The Levels of Service approach

Services are provided based on a tiered approach varying from basic to complex F&A
processes based on the client requirements and extent of outsourcing.

High value services such as financial and market

Enhanced Plus analysis, budget process administration, and
Consultancy.

Complex accounting services which demand

Enhanced specialist skills.

Ancillary services which, together with the foundation

Foundation Plus level, provide high levels of user support.

Core transaction processing and reports generation,

Foundation supported by a transaction information desk.

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 Case Study: F&A process efficiencies
F&A

Business case requirement Controls Metrics

 over 35 per cent operating cost
reduction • duplicate invoice detection • supplier invoices from 7 to 3 days
 payback under 2 years • high value reviews • customer invoices – 100% on time
 on time delivery • removed duplicate suppliers • management reports – 20%
 no impairment to financial control. • removed duplicate customers. quicker
• staff debtors reduced by 70%
Improvement
60% • missing timesheets reduction - 40%

Automation Knowledge

• 18 process automations • policy

• 390 man-hours savings per • methodology

month • system
• performance based

Systems upgrade Operational • strong European language skills.

6% changes
16%

Process transition
changes
18%

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 Case Study: Procurement

Efficiency outcomes Business targets achieved

• reduction in average lead time by 50 per cent. • reduction in operating cost by 30 per
cent
• reduced inactive supplier database by 15 per cent
• payback within one year
• implementation of Immediate monthly reporting.
• consistent on-time delivery
• internal control strengthened.

Requisition Purchase
Off-shored processes
approval order eCommerce
• vendor management
Requisition
entry • quotes and ordering through platform
and quote builder system
Supplier • negotiations

AP/GL
• fulfillment
• inventory management
Invoice
eCommerce
matching • reporting to RPM/VRM/VPP
Posting Match
• non-cost of sales support
Not match

Invoice • quality procedures

Archive
approval
• training.
E-procurement using ERP platform

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 Case Study: Offshore Insurance Centre in the Philippines

• What they do:

– Set up transaction processing and call centre in early 2003
– Provided Quality Management and project work in 2005 for the parent
– Fully USA focused
• Benefits:
– Improvement in productivity over 10% by year 2
– Quality improvement and consistency – weighted average transaction quality at
98%
– Lower attrition and higher level staff than the industry norms
– Savings over US at 50% per employee
• Metrics (see next slide):
– 482 positions transferred with work done by 462 Philippine staff. Volume
increase over two years of 6%, giving a total 10% improvement in productivity
– Actual costs almost USD400,000 less than planned as training was handled by
local employees not travellers from US
– Fully USA focused

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Case Study: Actual Customer Savings

Cost Savings

US Project Office & Remote I/T

Delivery
66% total
SG&A
savings
66% total
savings
International Telecom

I/T Equipment & Maint.

49% hard dollar
savings
49% hard dollar
savings
Facility

Indirect Labor

Direct Labor - Supervision

Direct Labor

US Baseline Costs Fully-Loaded

Costs (including customer's
expenses)

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Case Study: Financial Services Management

$
`
FUND
` ADMINISTRATION
BANK (VARIOUS) (USA)

ADMIN SYSTEMS
A.S.P. (USA)
INTERNET
128-bit encryption

`
DISTRIBUTORS
(VARIOUS COUNTRIES)

`
LOGICACMG BPO
(PHILIPPINES)
`
FUND MANAGER (I.O.M)

PRODUCTION E-FAX EMAIL

SYSTEM WEB MANAGEMENT

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 LogicaCMG has taken reasonable care to ensure that the information contained herein is correct at the time of publication. Before using or relying on any
content in this presentation, independent verification should be obtained. LogicaCMG accepts no liability nor responsibility for any use of or reliance upon the
content of this document.

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