Outsourcing initially was restricted to the bigger companies. As times have changed and accounting firms realized the benefits that they can reap from partnering with them, outsourcing has become a popular business model. It is, now, a global trend. Besides their cost benefits, access to a global pool of talent, and better efficiency of the in-house teams, outsourcing helps in the overall growth of the business.
While there are many benefits, one of the ticking apprehensions that businesses have is that of cultural differences and intercultural communication. While the world has come closer due to digitalization, cultural differences continue to pose an itching threat. While accounting firms work with teams cross-border, several aspects need to be considered to ensure they build a strong partnership.
Problems caused by cultural differences in accounting outsourcing:
The apprehensions of the accounting firms around outsourcing could be based on their personal experiences or from something they have heard. To know the right steps to combat the problems, it is important to dive deep into the challenges.
- Miscommunication and misunderstanding:
The major problem occurs when there is a tendency to assume. It is only human to do so. The lack of clear communication due to lack of time or the assumption that the outsourcing partner simply wouldn’t understand leads to this problem. Between what has been spoken and what has been agreed upon – sometimes there is a gap. This could also happen because the teams aren’t working in the same time zone. Sometimes, teams tend to leave things till the last moment which only ends up making things worse.
- Language proficiency:
The language proficiency of the outsourcing partner can have a great impact on how clear things appear. If the outsourcing partner isn’t fluent in the language of the clients, expressing their thoughts, ideas, and strategies becomes very challenging. Misinterpretation, due to a lack of proficiency in the language, also leads to inaccuracies in work. The partner might also struggle with problems understanding the questions and feedback.
- The “mum” effect:
In some countries, the concept of hierarchy within the organization is too strong. If the outsourcing partner is based in such a country, they could withhold bad news, fearing the undesirable consequences. In these countries, the concept of maintaining harmony at the workplace, as much as in the personal life is strong. The “mum” effect has a significant impact on a project. If the mistakes and errors do not get resolved on time, they can go unreported, and their impact on the client is severe. When you try to find a resolution at this point, it gets expensive too.
- Loss of productivity:
Miscommunication can often lead to a lot of back and forth. It leads to errors and then fixing them requires additional time. All of it can hamper the productivity and efficiency of the tasks and the businesses as a whole. Errors due to miscommunication also lead to a loss of valuable time.
- Cause a strain in the relationship:
With different cultures come different styles of communication. This can cause a significant strain on the relationship with the outsourcing partner and with the clients of the accounting firms. The differences in culture lead to differences in opinions which enhances the way each of them perceives their businesses.
Tips to manage cultural differences effectively:
Problems arising due to cultural differences continue to be a luring apprehension for accounting firms. But it does not mean that firms cannot manage it the right way.
- Introduce “cultural fit”:
Right from the beginning of the partnership with the outsourcing partner, introduce the cultural fit. Tell your accounting outsourcing partners about your goals, objectives, and aspirations. While many might think that it is not as important as the budget fit or the expertise of the team, it is all about choosing and building a team that understands you. Understanding the outsourcing partner’s culture also helps build a long-lasting association. It is important to treat them like your own team, rather than an external resource. It helps bring balance and enables the accounting firm paves the path to success.
- Set clear expectations:
Before you start a project, make sure that you have explained your expectations for the project and the communication in detail with your partnering team. If you need to get something done beyond your scope, it is better to talk to the team in advance to understand their capabilities and bandwidth. Explain your goals and objectives behind every task. You can never overcommunicate. So make sure to have weekly status meetings, and monthly review calls and start a platform where queries can be raised daily. This will help everyone stay on the same page.
- Keep an open mind:
When outsourcing, always remember that another person’s experience can’t be yours. You will need to acknowledge that everyone has their own thoughts and opinions. You might not agree with everything. But it is important to hear other points of view. You will have a lot of apprehensions about accounting outsourcing unless you have tried it. As you work with global teams, it becomes imperative to embrace differences and see beyond them to make them work. Your outsourcing team’s different perspectives will help you solve a lot of problems that otherwise would have been hard to spot.
- Use tech to your advantage:
The world is coming closer with digitalization. Irrespective of the field, firms seek teams with different perspectives for their firm, which is only possible when you hire employees from different backgrounds. Outsourcing makes it easier. There are various communication tools like Teams, Zoom, etc, and project and program management tools like Monday.com, Asana, etc, that are readily available to help you stay connected.
- Language barriers can be addressed:
Many accounting firm leaders are apprehensive about how well can the outsourcing teams speak English when they outsource to a team in India or the Philippines. Most of the people who will become your team of accountants are fluent in English. They have experience working with international clients who are mostly English-speaking. Besides their expertise, they also know about handling clients across the world. All they need is a little support.
Managing client apprehension in language and culture in outsourcing: Conclusion
In case you are outsourcing for the first time, culture shock can be real. But it does not have to be that way. Cultural differences will always have a significant impact. It is important to note that outsourcing acts as an advantage for accounting firms. While the apprehensions have some truth to them, learning all about handling them the right way will allow us to avoid misunderstandings and conflicts.
Want to know more about how you can benefit by outsourcing accounting? 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.
