We are helping lot of Accountants with outsourcing their work, especially to ‘offshore’ locations.

This is not a new topic… but there is more momentum than ever before so let’s look at offshoring in more detail.

Why consider offshoring in the first place?

Here are our top 6 reasons:

1. It’s tough to HIRE top-class employees. And it’s even tougher recently. There are many reasons for the change… but that’s the subject of a different article! 

2. It’s difficult to RETAIN top-quality employees. Having worked hard to hire them, you can easily ‘go backwards’ when they don’t stick around.

3. It’s challenging to MANAGE employees. This is more controversial. Many Accountants are excellent at accounting and some are good in business development. A few are also good managers, but they’re the minority. The result can be a lot of time spent managing teams, with limited success. Offshoring can – in some cases – reduce time spent on management.

4. Seasonality in our industry makes flexible work arrangements more attractive.  

5. An unpredictable economy encourages business owners to reduce costs (like a large payroll) in favor of less onerous obligations (like subcontracting arrangements).

6. Fee pressure also urges Accountants to reduce costs. Accountants need to do more with less, if they are to satisfy Clients, grow and maintain reasonable levels of productivity and profit.

So why doesn’t EVERYONE offshore?

Often reasons put forward include:

• “my Clients won’t like it” OR
• “it will be too hard to explain this to my current team” OR
• “the quality of the work will be substandard” OR
• “I’m worried about data security”. 

There is merit in these concerns… but the biggest obstacle is usually just getting started. Accountants tend to stumble over questions like:

• Which clients should I offshore?
• Which parts of their work should I offshore?
• How will we share data?
• How much time will all of this take? 
• Will I have to train people?
• What happens if something goes wrong? 

Again, these are legitimate questions… but they just need to be worked through. A positive trend is that some outsourcing companies make it easier to define the Scope of Work. (It’s in their interests to do so). Also, technology is increasingly powerful so remote access, security and data transfer are more efficient.   

What are some Best Practices when considering offshoring?

There is no formula but here are some pointers:

1. Start small. Pick a few clients you view as uncomplicated. Perhaps this is tax preparation work for Individuals or small Corporations. Maybe it’s simple bookkeeping assignments with basic reporting. Later you can expand the scope to more clients or more complex work like Management Reporting, Financial Analysis, Tax Advisory etc.

2. Take a long-term view. The rewards of effective offshoring will be realized over many years. Therefore invest time early on to develop processes and properly define the Scope of Work, deliverables, pricing, escalation procedures and so on. 

3. Enter a Fixed Price Agreement. Define a clear Scope of Work and then pay for completion of that work. You are not ‘buying a person’ or a ‘block of time’. Yes, this scares a lot of Accountants who are used to operating with a vague Scope of Work which can result in them taking on extra (unpaid) assignments.  

4. Evaluate Competitive Bids. Find a couple of providers you are comfortable with and choose the one you prefer.

5. Choose a provider that is PROCESS or POLICY-driven. Some providers will demonstrate their stringent policies on workstation security, mobile phone usage, office access protocols, firewalls, user monitoring, document storage protocols, encryption methods, use of Standard Operating Procedures (SOPs), checklists, hiring policies etc. The skills of the people are important… but processes and policies are the mark of a mature organization, especially in outsourcing. 

A Case Study

A UK-based Panalitix Client had been in business for 23 years when they decided to send work offshore. 12 months later, we see the following results:

1. Significant cost reduction: This is PARTLY because they pay only for work completed. That means more profit and a higher business valuation.

2. Partners reallocate time to growth: Some of the time saved in production and management is allocated to up-selling Existing Clients and Attracting New Clients. One partner also developed an Estate Planning product which had been ‘on hold’ for many years. 

3. Increased Client satisfaction and retention: This arises as the onshore team spends more time managing Client relationships (versus production and internal management).

4. Reduced risk associated with departing employees: The level of dependency on any employee is greatly reduced, especially in the Production Team, where the offshore provider is responsible for delivery based on the agreed Scope of Work.  

5. Flexible resourcing: A major Client was being acquired and needed support in due diligence. The firm scaled up the offshore team on short notice, a project they would have avoided before.

6. Improved morale: There were ‘naysayers’ at the outset (including one Partner). However the mood is now one of a modern firm, embracing technology, with enough capacity and making smart business decisions (like they encourage their Clients to do).

Business leaders have always innovated to drive profitability and efficiency. Offshoring is one such example and we expect this to become more mainstream in the accounting industry. 

We are helping lot of Accountants with outsourcing their work, especially to ‘offshore’ locations.

This is not a new topic… but there is more momentum than ever before so let’s look at offshoring in more detail.

Why consider offshoring in the first place?