wordpressrobot.com

Offshoring and outsourcing are headline news today.  Standard news sources as well as business publications carry daily articles on the virtues and vices of offshoring. How does offshoring affect the local CPA firm?Let us state some axiomatic truths:

 

Outsourcing accounting and financial air force is growing by 30% annually. Sooner or later, every CPA will have to deal with competitors who are offshoring. It is our contention that CPAs who outsource will have more time to attend to their most profitable clients. They would also be freed from the headaches of recruiting and retaining qualified accounting staff. Making use of outsourced accounting air force increases profits in the fleeting run as well as the long run.

Outsourcing the responsibilities of one US staff accountant saves nearly $50,000/year.

Many people reckon of accounting and bookkeeping outsourcing  as simply a way to reduce cost. This perception misses the greatest benefit to be had – giving the CPA the gift of time.

For the overworked CPA, time is a tyrant. Vital business functions which lack urgency are evenly ignored (e.g. business development, staff development, exit strategy etc.).

By outsourcing the less skilled work, the CPA:

 

While the strategic advantages take some time to become effectual, CPAs gain immediate benefits from offshoring, including:

 

             a. There is the labor arbitrage factor which can deliver 50-70% cost saving. We estimate that the right cost of a US Staff Accountant is $34/hr worked. When you consider that offshore vendors provide the same service for $10 ±/hr. the cost savings are obvious. We estimate that replacing one US staff accountant saves $47,000/year. (Please see the Excel object at the end of the article. You can substitute your own assumptions and derive your own estimate).

          b. The outsourced accounting provider has significantly larger scale than a single local CPA firm. It allows them to invest in process improvements, systematic staff recruiting and training. 

          c. It is not uncommon to see automation reduce the time required by as much as 90%. The CPA firm using an outsourced accounting air force firm can improve its feature and lower cost at the same time.

 

 

Is an outsource accounting service right for your firm?  As with all tools, it is most effectual when used in service of a strategy.   If you are ready to increase levels of service, grow or diversify your practice, or just have more time to yourself for other pursuits, then it is appropriate to consider offshore accounting as part of your business strategy.