There are really no hard and fast rules on how and where to cut processes. A common initial approach is to retain in-house matters involving judgment, policy formulation and interpretation, analysis or decision-making, while outsourcing low-risk, routine tasks and non-critical transactional activities that do not require more than a limited knowledge of the company or business involved. On the other hand, some companies are extending outsourcing to include even more sophisticated performance reporting and business analytics, expanding outsourcing programs as they gain experience and confidence.

To maximize targeted benefits (e.g., streamlining processes, acquiring new skills and strengthening core capabilities), the methodology usually used to determine what to outsource is called “scoping”, the process of determining which functions or activities to retain in-house and which to outsource after first baselining or benchmarking current competencies for each process. Typically a collaborative effort between key financial executives (such as the CFO) and qualified representatives of the BPO provider, it is a best practice that is fundamental to the long-term success of a strategy that utilizes outsourcing as a tactical tool for transformation and performance improvement - especially since it gives financial managers a keenly more sophisticated understanding of their own internal finance and accounting systems.

To scope processes properly, you should do it “end-to-end” and from an integrated viewpoint. For example, when reviewing your payroll accounting system, you should also incorporate a related review of your HR system; when doing payables, also do purchasing; when doing receivables, also do collections and credit management; etc. Walk through each process from an integrated perspective - for example, from supplier transactions through final sales to customers. An end-to-end, integrated scoping approach will greatly enhance the benefits generated by your outsourcing efforts - not just because of operating cost savings, but also due to the enhanced quality of services rendered by the BPO provider that will be generated by the avoidance of unnatural breaks in business processes. The point at which to cut a process is critical - the correct decision will ensure optimal hand off to the BPO provider.