Is the shortage of staff impacting your firm’s growth aspirations?
Are some of your staff members leaving due to an increase in ‘Repetitive Task Injury’ driven by involvement in unnecessary manual activities as found in a research from BlackLine?
Or are you increasingly finding it difficult to find suitable accounting and finance staff as reported by APSCo?
In this article we explore how the shortage of skilled accounting staff is driving the need for outsourcing and why your firm should perhaps consider outsourcing some of its work.
Outsourcing is hardly new
Outsourcing work overseas is hardly new. For years, manufacturers and businesses in production-type industries have traditionally exploited outsourcing to curb expenditure. Now accountancy practices and other professional services companies are picking up on the trend. According to a survey of its customers by IRIS Software last year, outsourcing is on the rise in the UK. Their report suggests that in the next five years “30% plan to delegate work to external providers”, with that figure “set to increase to 50% in ten years”.
Cost saving is the biggest advantage, however it is not the sole reason accountancy practitioners in the UK are opting to outsource. Businesses today are part of a global economy and should be getting their work done in a country where it is most suitable to do so - whether that be a low-cost UK destination or overseas. Many of QXAS’s clients were forced to outsource because they couldn’t find suitable staff members in the UK, while some came to us because they were looking for support to strengthen their practice and meet their growth goals. We think outsourcing is a lot like leasing employees but on a smaller level. By outsourcing, our clients have not only contained the cost of hiring and training new staff members but also found time to develop and grow their practices.
What the critics say?
Some people are upset by the whole concept of outsourcing. Here are some of the specific problems that have been raised:
1. Outsourcing hurts the local economy
This is number one on the critics list. We think it is as misunderstood as it is interesting. Sometime back the McKinsey Global Institute undertook a study entitled ‘Who wins in Offshoring’ and concluded that for every dollar spent on a process outsourced to India, a dollar and a half is saved. It went as far as to say that outsourcing even returns to the economy as earnings. Far from being a losing game, outsourcing creates a mutual economic benefit. Take this for example – many offshoring firms which specialize in UK outsourcing are owned in whole or in part by British businesspeople, just like QX Limited is, and repatriate a part of the profit back to the UK economy.
2. The quality of Indian accountants is below-par
The quality of work is a legitimate concern but it applies whether you are hiring someone in the UK or India. Supervision is the key. It is important to work with a partner who invests in training and supervision to get long-term benefits. QX is an ISO 9001:2008 (indicating commitment to quality), ACCA approved employer and also runs an Accountant Training Academy to ensure a regular supply of talented accountants.
With regards to work quality most outsourcing companies offer to do jobs entirely free of charge to demonstrate the quality of their services. They all operate the latest UK commercial and professional software; for example, QX runs IRIS, Sage Accounts Production, CCH, VT, Digita, Viztopia and MYOB and will bring others in-house if required by clients. The bottom line is; you need to try it. Anything that allows your staff to work strategically is worth considering.
3. We will end up losing talented individuals in the firm that we had hoped to retain
Outsourcing doesn’t mean firing extra members of staff. The idea is to transfer low value added work offshore and free up resources for more value added work at home. If your skilled staff continues to perform low-margin commodity jobs, you should consider the opportunity cost when they could be doing profitable advisory work?
4. Language barrier and cultural differences
India’s knowledge pool is deep, education is cheap and it boasts of an English-speaking workforce which is second to none. QX’s chairman, Chris Robinson – a KPMG qualified ICAEW chartered accountant, set up QX in India way back in 2004 because he felt that there was a culture of inquiry in India – perfectly suited for accounting tasks. He met many smart, incredibly affordable people in India when he first came here on a recce and decided to set up an outsourcing company. Of course they won’t all speak Oxford English but that shouldn’t stop you from understanding what they are saying and QX particularly employs good English speakers.
5. We will lose control
This is a major point of resistance to the adoption of outsourcing. However, this is a common misconception as services should never be entirely handed over. The entire process should be carefully managed to ensure that expectations are met. Disappointments do occur but only when the management of the outsourced process is inefficient or incorrect. When you decide to outsource you must bear in mind that you can’t simply forget about the outsourced process, hand the work over and expect everything to happen smoothly. The best way to deal with this is to build a partnership, and work together as a synergistic team. Pre-defined KPIs, SLAs, daily interactions, regular meetings and stakeholder management as well as control over expectations from both ends are crucial for the success of any outsourcing initiatives. Only then will the outsourcing team help to gain experience, skills and expertise rather than causing you to lose control.
6. Security issues
Security should be a top concern with both you and the outsourcing provider. Find a company that doesn’t ship any documents overseas. Work should be done on a paperless, secured environment. Basically all the input should be done by a qualified Indian accountant on either a secure server or by remotely accessing your system. It’s advisable to never send originals. Another alternative is to invest in a high-speed scanner which never sends anything but an electronic image. This will not only ensure that you don’t lose anything but also have several copies of the original documents. As it might take considerable time to scan a working paper file and a year’s accounting records, you can also send documents to the outsourcer’s UK office, if they have one (QX is based in Skipton, so this is possible). The following link http://www.qxas.co.uk/how-we-work/secure-information-sharing and video www.qxas.co.uk/about-qxas/information-security will help you understand QX’s approach to cyber security and help you determine the standard you should expect from any outsourcing partner.
Respond to the change
Faced with a shortage of staff and an increasingly competitive market, when an accountancy firm decides to hire an outsourcing partner to deal with their compliance jobs, it’s sometimes seen as indefensible but look at it from the angle of time and resources in your accountancy practice: Would you rather have your senior staff spend time playing King / Queen of the Calculator or delivering profitable advisory work?
Its straightforward arithmetic, though somehow skewed depending on the value you place on compliance work (i.e. how much you think it contributes to the growth of your practice) and whether you have the right skills to do the jobs.
To borrow a line from the American television series, The A-Team, “If you have a problem, if no one else can help, and if you can find them, maybe you can hire…an outsourcing company.”
Do you think outsourcing your tax and accounts to India is a good idea? Why or why not? Please tweet us your comments www.twitter.com/QXASLtd