Looking to enter Asian markets? Think shared services, Asia finance and cost management expert advises
9/23/2013 4:13:00 PM
International Consulting speaker Matt Podrebarac was formerly Accenture’s lead partner for North America finance and strategic cost management, banking, and capital markets
By Yuezhou Huo ’15
Multiple differences across Asia’s many countries and regions — including languages, currencies, cost structures, taxation, and regulations — pose challenges to global companies that want to enter the Asian markets, noted International Consulting speaker Matt Podrebarac in his Sept. 10 presentation to students in the International Consulting practicum, a class offered by Richard Coyle, executive director of the Emerging Markets Institute.
A scarcity in management expertise is also a limiting factor, Podrebarac pointed out. The solution? Shared services can address both the scarcity of specialized skills and standardization of practices.
Now a private investor, Podrebarac was formerly lead partner for North America finance and strategic cost management, banking, and capital markets at Accenture. During his 26 years with that firm, he spent 13 years in Asia, where he designed, marketed, and implemented shared services.
Shared services can establish centers of scale as well as centers of skill, offering cloud services that "new business can directly plug into," Podrebarac said. Take a shared finance operating model, for example. In this model, the center of scale usually involves transaction processes, payroll, and general ledger services. The center of skill offers specialized expertise in risk management and mergers and acquisitions.
According to Podrebarac, shared service models are most suitable for large companies seeking to enter a new market quickly, without having to fill all the functions that a business needs, such as finance, human resources, and IT. In Asia especially, where "growth is the whole thing, companies try to quickly get into the market without having to set up an entire back-office system."
In addition to speeding up new market entrances, shared services can minimize costs by setting up centers of scale in low-cost regions. It can also improve talent-retention. Podrebarac cited an example where one client, an insurance company, experienced high turnover among actuaries, because their specialized actuaries did not enjoy performing tedious transaction processing, such as closing the books. Moving those transaction procedures into the cloud was a good solution for that problem, said Podrebarac. Local talent could then focus on the local market, instead of worrying about the back office.
Shared services can also effectively alleviate some of the disruptive effects of changing technology. For example, when a global company tries to move to SAP (Systems Applications Products audit), it might need to go through the same process multiple times in each business operation. "The more you can hub, the less local markets will [be disrupted by changing technology]. And this platform of shared services tries to address that," said Podrebarac.
Towards the end of his presentation, Podrebarac defined the qualities of a good shared services center as the right supply of skills at the right cost of labor. "The center moves around, but the model stays the same. We have to stay on top of where the latest place is that's a good hub, and where the labor costs are not going up," said Podrebarac. He referred to Malaysia, India, and China as some good choices for centers of scale. "But not in Shanghai, because of the high property cost. Our newer centers are moving inward in China and we use Shanghai more as a skill center."
Yuezhou Huo ’15 is an intern in Marketing and Communications at Johnson.