Most accounting firms are aware of the benefits that they could reap from outsourcing their practice. But here’s the thing – no matter what the outsourcing provider tells them, they have their share of apprehensions. Being cautious of the pros and cons of outsourcing is a good thing. It helps firms create a cushion for worst-case scenarios and maintain a support system. But it also holds them back and prevents them from achieving complete potential. While the apprehensions about outsourcing accounting are understandable, there are full-proof solutions to these. Offshoring accounting is known to help reduce costs, enhance the work efficiency of the internal teams and so much more.
Whether you are an independent accountant or running a business, overcoming the pitfalls and building a strategy accordingly can help reap many benefits.
Here are the top apprehensions that clients have about outsourcing and ways to address them in the right way:
- Ensuring complete cyber security: The Problem:
Accounting is a field where confidentiality is supreme. One of the main concerns in outsourcing is that of ensuring cyber security. In 2019, 125 billion dollars were spent on information security. Accounting is always a target for hackers. It makes it challenging for offshore accounting firms to ensure high-level security for their clients. Small accounting firms often don’t have a powerful defense mechanism. Many accounting firms think that it is dangerous when data is transferred to an offshore partner. But in reality, the data is safe when you outsource your practice.
From transferring data to recording it – everything is done digitally through secured servers. Despite the safety and security measures, data breach continues to remain a concern for many.
The Solution:
To make sure you aren’t going wrong with the outsourcing partner, hire a partner that has a dedicated cybersecurity process in place. Your choice of outsourcing partner should be able to safeguard sensitive financial information, especially if you are under attack. When hiring a partner, you should let them know of the kind of cybersecurity you are looking for and then see if they meet your needs. Access to data should be restricted and not allowed outside the premises. There should be a provision for constant backup. Check if your partner has security certifications.
- Language and cultural barriers:
The Problem:
The best part of outsourcing your accounting practice is that you do not have to limit your geographies when it comes to choosing teams you work with. By offshoring, you get access to a global talent pool. But one of the apprehensions that arise here is how can the firms adjust to the time differences, culture, and language differences. For a US-based accounting firm, it can be difficult to understand the linguistics and cultural dimensions of the teams in India or the Philippines. They fear that these barriers can lead to miscommunication between teams and cause a rift in the project.
The Solution:
It is important to understand that the outsourcing partners often have a team who are adept in English. They are multi-lingual and have exposure to working with clients of different cultures – mostly English-speaking nations. Understanding the culture is a two-way lane. Just like the outsourcing partners, the leaders should also understand and acknowledge the cultural differences of their partners. The time difference, actually, works in favor of the accounting firms. Most outsourcing firms will have a “follow-the-sun” model, which means that accounting firms will get the previous day’s work done before they start their day. This helps them stay ahead of time.
- Unclear Goals and Expectations:
The Problem:
Many accounting firms tend to stay away from offshoring because they are apprehensive that, unlike their in-house teams, it will be difficult to have clarity of goals and expectations. The problems arise when the outsourcing partner isn’t completely aware of the client’s objectives and hence, they fail to achieve it. That is why, along with assigning tasks, it is also important to explain the objectives behind them. When the outsourcing partner knows about the objectives, they will curate and customize their solutions accordingly.
The Solution:
The foundation of ensuring clarity in goals and objectives lies in impeccable communication. This needs to be followed right from the beginning. Whether it is about the scope of work, the delivery date, or the objectives behind performing a task, both parties should be on the same page. Modern businesses use modern technology for communication, which allows teams sitting miles apart to communicate and coordinate regularly. Using task management software also helps ensure that everything is in one place. Software like Monday.com helps ensure that all documents are collated, and queries can be raised by either party here. This alleviates the need to sit around and wait for someone to respond to the emails. Adopting these measures helps avoid miscommunication.
- Budget Constraints:
The Problem:
Many accounting firms think that outsourcing their accounting practice is costly. The main reason behind this apprehension is that they need to hire a global team for the kinds of tasks they do. They also fear that while they could ask their in-house accountants to simply add new tasks to their to-do list, doing so while outsourcing comes at a hefty price. Accounting firm leaders also are worried that they will lose time and money in the training of a remote team.
The Solution:
The cost of outsourcing is dependent on many factors – the number and types of services, the number of accountants needed, their expertise and seniority, the number of hours they dedicate to a project, and so on. One of the topmost benefits of outsourcing accounting is that it helps reduce costs. There is no infrastructure cost involved. Almost all the time, the teams are adept at the routine tasks and the software you use. The need to train them is very lean. Even if you do, it is just the process. The team will mostly have the technology and software you need. Outsourcing also allows you to scale up during busy seasons and scale down at other times without much hassle. For some of the outsourcing partners, you can begin by just checking how things work before making a final commitment.
Common Outsourcing Apprehensions – End Note
Outsourcing as a business model is often misunderstood, especially by the people who need it the most. Before you make a decision, analyze the concerns you have and find the possible solutions that will help you gain the most out of it. With the right approach, outsourcing can become the tool that leads you to success.
Finsmart Accounting has been addressing and helping clients solve their apprehensions and get the most out of the model for 17+ years. Want to know more about how you can address your capacity challenges and other problems by outsourcing? 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.
