Spending on outsourcing of accounting and finance functions is expected to reach over $25 billion around the world this year, according to a new report.

The report, by KPMG and HfS Research, found that 90 percent of finance and accounting business process outsourcing engagements have been consistently meeting their cost-reduction targets and initial delivery performance. Corporate leaders are looking at more radical strategies to increase productivity and global business effectiveness in the aftermath of the recession. Enterprises overwhelmingly want to look at new ways to take advantage of lower-cost operations and standardized financial processes, where there is little competitive differentiation to be achieved by operating inhouse.

Ron Walker, a partner with KPMG and the finance and accounting service line leader for KPMG's Shared Services and Outsourcing Advisory practice, said that business process outsourcing of finance and accounting “needs to be viewed as an extension to an enterprise's capabilities, not a substitute.”