Since the days of time sharing and bureau services in the 1970s, the IT industry has sought to provide organisations with outsourced services that enable them to move processes outside the organisation and run them at a lower cost and/or more efficiently.

Industry analyst Gartner reports that worldwide IT outsourcing (ITO) revenue totalled $246.6 billion in 2011, representing a 7.8% increase from 2010 revenues of $228.7 billion. Indian-based IT services providers and companies providing cloud-based services delivered the highest growth rates in 2011.

And the global outsourcing market is still growing, thanks to the need for companies to reduce internal costs in difficult economic conditions. According to a recent report by Global Industry Analysts, the international Business Process Outsourcing (BPO) market alone will reach $280.7 billion by 2017.

Finance & Accounting (F&A) outsourcing is expected to achieve the fastest growth among all horizontal BPO segments. This is being driven by the need to streamline costs and increase competitiveness, with F&A outsourcing a vital part of companies’ ability to achieve those objectives.

While outsourcing partners pride themselves on their ability to maintain high quality data management standards and reduce the costs of running processes, there is a vital piece of business activity that warrants particular scrutiny. This is the use of Excel spreadsheets: firstly as a means of sharing critical data between the company and outsourcing partner; and secondly as a component of key business processes that must remain in the company even after the outsourcing. When business processes are ‘split down the middle’ like this, one could argue that the job is only part done.

Outsourcing partnerships aside, the cost of managing spreadsheet risk is a major internal concern for organisations. Without expensive, inefficient manual checks, spreadsheet errors, or even fraud can propagate through budgets, financial statements, and pricing, leading to bad decision-making or even significant financial and reputational losses. The problem is that efficiently tackling these data management and risk issues can only be achieved outside the knowledge of IT departments as the data is held and generated in users’ own spreadsheets.

The challenge is exaggerated by the fact that spreadsheets are used everywhere, by companies of all sizes and across all sectors because they are so easy to use, low-cost, flexible and readily available. Indeed, organisations are often horrified by how many individual spreadsheets are used within their business, and commonly admit to having poor governance control over their use and maintenance.

But the prevalence of spreadsheets is not just the result of user short-cuts. Decades of multi-million investments in F&A software platforms such as treasury, tax, reporting and analytical systems show that they cannot keep pace with the needs of the business and the gap is filled with spreadsheets.

The reality is that spreadsheets – with all their associated risks and manual inefficiencies – will never disappear from the corporate environment. The adoption of proper management approaches therefore offers multiple opportunities to both companies and their outsourcers - all of which can benefit outsourcing relationships. So how can outsourcing partners deliver these benefits?

The good news is that the same tools used to manage spreadsheet risk internally can be applied in partnership with an outsourcing partner. ClusterSeven’s software, for example, can monitor this process, bridging the gap between client and BPO provider. ClusterSeven can work with clients to compile reports to monitor the quality of BPO service from a data security point of view.

Further to this, there is a very real new business opportunity for BPO providers to take on spreadsheet operations themselves, rather than feeding data back for the client to analyse. This means that they take over the whole process of data management and governance, not just the non-spreadsheet parts. If the BPO provider does this then it provides much greater scope for process efficiencies – delivering wins for all parties.

All of the industry research points to a continued boom in outsourcing and BPO, particularly in F&A processes. The thorny issue of spreadsheet risk will not go away, and smart organisations and their outsourcing partners are increasingly looking for ways to address this challenge using proven tools already used to manage internal spreadsheets. The even smarter outsourcing companies will focus on a new revenue stream fuelled by their ability to manage spreadsheet risk on behalf of their clients.