Here’s the fun thing about outsourcing. The perception of this business model is often based on what accounting firm owners hear, not what they experience. There is no doubt in the fact that some accounting firms who have tried outsourcing most definitely could have had negative experiences. But that is only the half-truth. Times have changed, and outsourcing service providers look at outsourcing as a strategy that enables the growth of their organization as well as that of their clients.
In 2019, the outsourcing market was valued at 92.5 million dollars worldwide. Needless to say, there must have been a significant amount of benefits that outsourcing helps reap. One of the most common things that accounting firms fear, before they have outsourced, is that it will leave a negative impact on their clients. Now this is far from the truth. Let us delve deep into the reasons behind this apprehension.
Understanding the Apprehensions:
- Loss of personal touch: Accounting firm leaders believe that clients value personalized services and direct interaction with the accounting firms. They fear that outsourcing will make the service impersonal, as clients will be under the impression that they are being handed over to third parties and the firm is no longer responsible for ensuring their success. However, the truth is that outsourcing can free up internal resources, allowing firms to focus on more client-facing activities. This allows accountants and leaders to dedicate more time to clients. The right partners, also ensure that the client experience remains consistent.
- Communication barriers: Outsourcing firms often work in different time zones. They are physically situated in a different country which leads to differences in languages and culture, leading to communication challenges. Firms also fear that this will lead to misunderstanding and severe breakdown in client relations.However, with advancing communication tech such as instant messaging, video conferencing, and collaborative platforms, communication is much easier. Reputable outsourcing firms have dedicated account managers who are aware of the firm’s processes, client expectations, etc.
- Quality and consistency issues: Firm leaders often fear that outsourcing will lead to a decline in the quality and consistency of services provided to clients. They fear that since outsourcing firms are external providers, they might not adhere to the same standards as the firm does in client servicing.However, reputable outsourcing providers maintain high standards and have quality assurance processes in place. Service Level Agreements can be established to define the quality metrics and performances that the outsourcing partner must meet. It helps maintain consistency and quality.
- Confidentiality and trust: Clients trust their accounting firms with sensitive financial information. For outsourcing firms, to be able to cater to their clients, they need to share this information with the outsourcing firm. There is a concern that this transfer of data and information may breach confidentiality and security.
Data security and confidentiality are top priorities for reputable outsourcing providers. They implement robust security measures, including data encryption, secure servers, and compliance with international data protection regulations. Accounting firms can further safeguard client information by choosing outsourcing partners with strong security credentials and by including stringent confidentiality clauses in their contracts. Transparent communication with clients about the measures taken to protect their data can also help maintain trust.
Understanding the broad range of benefits that can be reaped by outsourcing:
In recent times, outsourcing has emerged as a game-changer for accounting businesses. It has helped make lives easy for accounting firm owners. This has especially helped small firms who are compelled to wear multiple hats at the same time. Outsourcing allows firm owners to delegate specific tasks and responsibilities to external professionals, thereby making time for core competencies.
Let us understand how outsourcing, unlike apprehension, can have a positive impact on businesses:
- Meet high demands without overextending your team size or strength: What happens when you put pressure beyond what your team can take? They are overworked and frustrated, and as a result, the probability of errors grows. Client demands grow constantly. One of the most compelling reasons to consider outsourcing is their ability to meet high client demands. This should not come at the cost of your team’s mental health. When your services are in demand, it showcases the trust that the clients have in you.However, challenges may arise when you try to meet all demands single-handedly. It reduces the quality of output and can even lead to missed opportunities to scale your business. Outsourcing allows teams to offload specific tasks to the subject matter experts.
- Scale your business while reducing risks: There is always a high risk associated with scaling a new business. As small accounting firms add more clients, hire more staff, and invest in infrastructure that can help improve the financial and operational challenges, they also need to find ways that help reduce the risks.
Outsourcing allows accounting firms to adapt to changing workloads, while gradually enabling business growth. There is no need for large upfront investments or commitment to a long-term team. With firms having transparent pricing, it is easier for accounting firms to make a decision. With the right outsourcing partner, you should also be able to scale up or down seamlessly. The flexibility and transparency allow you to respond swiftly to the changing market conditions.
- Focus on what you do best: One of the main roles of an accounting firm is to cater to successful client service and take care of their satisfaction. When firms are compelled to shoulder many responsibilities at the same time, they often get stuck in the operational functions, which leaves them with no time for core competencies.
Taking on tasks that are outside your expertise can be time-consuming and may not yield the results you are looking for. Outsourcing allows you to concentrate on what is important and what you do best – whether it is strategizing, client servicing, tackling stakeholders, etc. While you focus on what is important, leave the routine tasks with outsourcing partners.
- Improved work-life balance: The instances of overworked and burnt-out accountants are very common in the industry. Since the pandemic, many have already quit with no signs or intention of coming back. One of the key responsibilities of accounting firm owners is to enable themselves and their teams to maintain a healthy work-life balance. Bearing an excessive workload to accommodate new clients and their changing expectations can have a severe impact on their personal lives.
Outsourcing can help regain control over the schedule and reduce the stress associated with managing every aspect of your business. By delegating tasks to outsourcing professionals, you can help reduce the unnecessary stress or burden on the team and enjoy more free time yourself.
- Managing seasonal workloads: During the tax season or year-end, accountants experience a rise in demand for professionals. Most of the small accounting firms do not have the resources or infrastructure to handle the sudden influx of work. When the existing number of employees try to pull the additional load, they end up making errors.
Outsourcing allows you to handle seasonal or temporary workloads effectively. Most of the seasonal and expected workloads can be anticipated. During such times, it is wise to take help from outsourcing professionals and then scale down during the not-so-heavy period.
- Improved relationship with clients: When we talk about relationships with clients, it is not just about increasing the number of clients. It is also about improving client relationships. Happy clients play an important role in spreading the word and ensuring that you get new clients.
By outsourcing, you can ensure that you meet deadlines, deliver better quality work, and maintain effective communication. When clients see that you can constantly meet their needs, they are more likely to become your loyal, long-term clients.
Outsourcing and client relationships – End Note
The fear of outsourcing negatively impacting your client relations is of a significant concern for many firms. However, the secret to success lies in choosing the right partner and adopting the right strategies. Outsourcing can become your tool to hence client relationships, rather than causing harm.
Outsourcing is not about giving off responsibilities. It is about optimizing operations to serve your clients better. By breaking the apprehensions and embracing the potential of outsourcing, accounting firms can strengthen their client relationships, enhance service offerings, and set themselves up for long-term success.
Want to outsource your accounting practice? Write to us at connect@finsmartaccounting.com.
Director Growth Strategy & Alliance
Maanoj Shah is a finance and outsourcing expert with strong Business Strategy and Scaling-up experience. Over the last 20 years, he has incubated multiple businesses and helped build global enterprises in verticals as diversified as hospitality, technology, and healthcare.
