The Future of Outsourcing

An exclusive look inside GE's back-office machine.

Since Gecis does accounting for most GE businesses worldwide, the next step was to move to reporting, down to the notes to financial statements. “These reports are created here, and sent to the businesses for vetting and validation before they get submitted to the SEC or the relevant authority,” says Anju Talwar, who heads Gecis’s nascent third-party business. In some cases, Gecis staff call attention to instructions by clients that do not properly meet standards.

“For example, in the case of FAS 52, on foreign currency translation, we are better equipped than many foreign affiliates because we get to see many more cases than an individual business,” says senior vice president Afzal Modak. “Often we get thanked for pointing out new insights.” Adds Bhatia: “We are an extension of the treasurer, of the controller, of the CFO. We wouldn’t say we’re here to advise you on how to structure the balance sheet, but because we operate as an extension of the teams, there is joint ownership.”

Gecis has scrupulously met Article 404 of the Sarbanes Oxley Act that requires certification of every financial process by an external auditor, from documenting who has log-on access to certain tasks, to laying out change-management plans. Given the sensitivity of the F&A work, Gecis shies away from classifying processes between low-and high-end. “It’s almost blasphemous to say that this is low- or high-end because of the exposure the CFO is facing,” says Bhatia. A low-end process like accounts payable may not be low end in the world of Sarbanes-Oxley, where, Modak adds, if a supplier is based in one country and wants to be paid in another, it could be money laundering. “CFOs need to be satisfied that there is controllership,” he says.

For GE, the analytics team is regularly called upon by CFOs of relevant businesses on issues such as pricing support, or creating revenue scenarios according to discounts and promotional periods for certain products; capital allocation, or how much capital a business is required to reserve against losses, achieve a desired credit rating, and meet regulatory requirements; and credit research, or background analysis of GE counterparties and assessing business opportunities with them.

Third Parties

As Gecis looks toward third-party growth, it’s now trying to get deeper into the supply chain, a task that falls to Goel. Currently, Gecis does demand forecasting and optimization of warehouses, inventories, and logistics. In the aircraft engines business, which has warehouses in 20 locations globally, Gecis maps past transactions to see what parts to keep in each warehouse, and then makes “a recommendation on the optimum number of parts for that particular warehouse, with the aim of reducing inventory across the board for aircraft engines,” says Goel.

In logistics, Gecis analyzes, based on the number of vendors and location of their warehouses, how GE can supply to its own customers in the shortest possible time. “This needs complete modeling of what you have to have in your warehouses, where they are being sourced, and what destinations they have to reach,” says Goel, “so people can optimize the time cycle of bringing the part to the end-customer.”

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