• September 29, 2023

IMA India’s 2023 Finance Department Benchmarking Survey findings: Insights and trends in finance function metrics

IMA India’s 2023 Finance Department Benchmarking Survey findings: Insights and trends in finance function metrics

IMA India’s extensive 2023 Finance Department Benchmarking Survey, reveals key insights on finance function metrics, costs, and trends.

IMA India recently completed a comprehensive survey that looked to build precise benchmarks for various metrics pertaining to the finance function. The 2023 Finance Department Benchmarking Survey Report compiles data and insights based on the responses of over 80 finance leaders across sectors. It has benchmarks on a range of functional activities, including budgets, staffing, technology as well as the overall productivity and effectiveness of finance departments. It tracks the size, efficiency and effectiveness of the function and is based on data collected from companies representing diverse industries, of varying size and ownership.

Our findings suggest that, at the median, the cost of running a finance department equates to 1% of revenue and 1.5% of the total cost – or Rs 7 crores in absolute terms. Finance budgets are expected to increase in both FY24 and FY25, by 10% at the median.

When it comes to the drivers of cost, expenses around staff headcount and technology and systems are expected, on average, to rise by ~11%. Typically finance departments allocate more than half of their total expenditure towards compensation of in-house staff and contractors. Companies also indicated that, on average, 32% of the finance budget is allotted to transaction processing. A good majority of companies reported being up to speed with rising costs, and nearly as many said that their budgets match the overall growth of the business and the perceived need for tech investments.

This is also reflected in their expenditure on technology, where most finance leaders report optimal levels of investment in IT and systems. Spending priorities in this area include data analytics as well as robotic process automation and cloud-based ERP. Nearly 2 in 5 companies report implementing multiple digital solutions with most others either evaluating or just starting out on their digital journey. However, change management serves as the most common hurdle to digitisation. Across the board, there is a visible gap between current and desired levels of automation in finance processes with payroll, IT and transaction processing closest to being fully automated.

CFOs are increasingly taking on additional roles and directly supervising areas like treasury and board management among others. Finance departments on average comprise 4.4% of a company’s total workforce with senior leadership accounting for the smallest portion, and individual contributors and managers/supervisors making up the largest share. Looking ahead, most finance teams want to expand

their staff in FY24 and only a quarter of companies report no change or an expected decrease in headcount. Hiring in the department is largely driven by a need for expansion and growth, whereas increased automation is the main driver of a reduction in staff. Soft skills like communication along with technical skills like data analytics and design thinking are being prioritised for hiring in FY 24. 

Most companies’ finance departments already use or plan to utilise Centres of Excellence (CoE) and Shared Service Centres (SSC) but those who do overwhelmingly rely on in-house SSCs and CoEs rather than external ones. The only major exceptions are payroll and transactions processing, which many organisations are looking to further outsource as they focus more on core competencies.

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