Why some accountants are offshoring work

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Offshoring enables businesses to solve the skills gap. But what are the best conditions to do it, and how do you choose the right partnership?

It’s important to remember the distinction between outsourcing and offshoring. Outsourcing occurs when a company contracts a specific process out to a third party, finding a specialist in whatever needs doing. Offshoring refers to outsourcing work to a contractor in a different country, usually to lower costs or take advantage of greater availability of skilled people or flexibility of workers.

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It’s not for everyone

There are plenty of risks. These include loss of control, effects on brand reputation if mistakes are made, difficulties integrating your team with the contractor’s employees, negative impact on client relationships and security concerns about access to sensitive data.

Why a business might offshore

There are positives too. There can be attractive operational and staff cost savings, and offshoring can provide access to skills unavailable internally. The contractor can stay on top of compliance issues, freeing the company’s team up to focus on strategic work.

Simon Rowe, Director, DGFinco, the outsourcing and offshoring finance arm of accountancy firm Milsted Langdon, says many firms have changed their mindset in recent years.

“In the past, the reasons for offshoring centred around cost and an immediate improvement of the bottom line – it is now a way for businesses to be more flexible,” he says. 

He adds that with the tight employment market, many businesses (including accountancy firms) see offshoring as the best and sometimes only way to obtain the resources they need to deliver to clients.

Ultimately, whether or not outsourcing is the right choice will depend on the specific needs and circumstances of the accounting business.

“When handling data across borders, look for suppliers who hold internationally recognised standards.”

Chris Andersen, licensed Insolvency Practitioner and accounting expert, www.businessexpert.co.uk

Due diligence

Conducting proper due diligence is crucial before signing any contracts. Businesses must develop a strong working relationship with their outsourced compliance partner and ensure there are clear lines of communication and reporting.

Peter Hucker, head of operations at cloud-based finance software company Xledger UK, says there are many things to consider.  “Any due diligence should not just cover the cyber security credentials of any supplier, but any third parties involved in the handling of their data,” he warns.

“When handling data across borders, look for suppliers who hold internationally recognised standards such as ISO 27001 (information and security). This can give organisations comfort that they are working with partners who understand the importance of keeping their data safe. Organisations collecting personal data should also carefully consider the handling of their data from a GDPR perspective.”

It’s a ‘No’ to offshoring

Founder of J Accountancy Jay Wilson MAAT AATQB is not a fan of outsourcing, although his firm has benefited from the fallout when other companies that have tried it.

“I take a dim view,” he says. “I understand why people do it considering the skill shortages in the industry, but I worry about the lack of control you have when you hand over work to another company somewhere else in the world.” 

Wilson says J Accountancy has gained new clients whose previous accountant was outsourcing without telling them. “There has to be transparency and clients need to know who they are dealing with when communicating with their accountant,” he says. “Many clients want their accounts done by the company they think is doing it – in the UK.”  

Team building and company culture are also important to Wilson. “We allow working from home and flexible hours, but I believe people learn quicker when they are in the same office and can ask questions of their colleagues. If you have five staff in the UK and five in Asia, you effectively have two teams to manage and I don’t like that.” 

Nevertheless, he does understand why some companies choose to offshore their work.  “I see the attraction from the money-saving perspective, but I would feel I was losing control and worry that if mistakes were made this would harm our reputation. I like to keep everything under one roof in the UK and train up younger people so we can grow our own team.” 

It’s a ‘Yes’ to offshoring

Co-founder of Severn Accounting, Ali Jaw FMAAT, began offshoring at the end of 2022 after many months of weighing up the benefits and potential difficulties. 

The company works with India-based Peakvisory, which was initially given a trial by Severn Accounting with staff working on straightforward bookkeeping. Today they work on clients’ accounts, but the final review is still carried out by the UK-based team. 

One of the main reasons for choosing to do so was that Severn Accounting was struggling to recruit sufficiently experienced staff in the UK. 

He adds that data security was a major concern. The decision was taken that everyone working on behalf of the organisation, including those in India, should access a UK-based secure server so that client files were protected. 

When an accountant does decide to offshore part of their business, clients need to remain confident in the level of service they are getting. 

“I was honest and transparent with our clients and told them that some of our work is being subcontracted. One or two were concerned, but I reassured them that no personal data will be leaving the UK.

“You need an open mind when outsourcing, and if you embrace the concept it can help you to scale your business. With the right due diligence, you will get the same quality but save money.” 

Setting up

Eriona Bajrakurtaj, Managing Director at London-based Majors Accounts & Co, has successfully offshored parts of her firm’s business, enabling savings but retaining control. Majors set up an office in Sri Lanka in 2021 and now has a team of 12 people in the country working under the Majors brand. 

“We used a Sri Lankan recruiter to hire locally and the people we find are well qualified, want to get stuck into the work, want to learn and are very respectful of our clients,” says Bajrakurtaj. 

She admits that initially the UK team did feel threatened and worried that the decision to offshore might impact their jobs, but people are more relaxed about it now and everyone takes part in joint meetings and interacts as one team under one brand. 

“Our clients are also aware and they do not mind,” she adds. “Today people can work from anywhere, but there is a time difference. Our Sri Lankan employees start work two hours before the UK and finish two hours earlier. The tip to making offshoring work is to ensure the overseas team is fully integrated and not just given pieces of work.”

How to do it

1 Be clear about the tasks you can and should outsource

Think about why you want and need to offshore. Is this about saving time and money? To complete tasks that cannot be delivered internally due to a lack of skills? Or difficulty recruiting the talent needed?

2 Do your research

Find out what companies other accountants are using and ask for advice on social media and at networking events. Who would be a good partner for you? Who has a good reputation? It’s not just about skills but also about culture fit – you need to want to work with them.

3 Be robust on qualifications and skills you’re looking for

You need to know the company you’re using has the qualified staff to deliver the quality you demand and can meet the deadlines you set to avoid delays that could make things busier internally and annoy clients.

4 Consider a trial, and offshore small tasks first

A trial period of two or three months can be beneficial to both parties. Once the decision has been taken, start small. This will enable you to assess the quality of work and to get used to managing the relationship.

5 Be transparent with clients

You may think clients do not need to know about offshoring so long as the quality of the work remains the same. However, clients will have concerns about their data and who exactly is overseeing some of their accounting needs. Be open and communicate what due diligence has taken place and how their data remains secure.

AAT: Securing future relevance

We have a new strategic plan to secure a bold and ambitious future for accounting technicians. Read more in our digital guide.

Read the plan

Steve Hemsley Is a journalist, media trainer, and podcast presenter. .

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