Top Countries for Finance and Accounting Outsourcing: India vs. Philippines

Despite the remarkable benefits of finance and accounting outsourcing, your outsourcing country can improve or worsen your outsourcing experience.

 

That’s because every country represents not just a set of people, but a way of life, getting work done, and potentially serving your clients.

 

Let’s look at the reality of outsourcing your work to India and the Philippines to help you determine the most suitable country for your financial and accounting outsourcing needs.

Why Businesses Are Turning to Finance and Accounting Outsourcing

The same technology that has enabled Finance and accounting firms to work remotely has empowered firms to augment their in-house teams with a global pool of skilled accounting professionals to reduce costs and capitalize on skilled accountants in other countries.

 

This trend has been driven by:

• Cost Efficiency: Outsourcing allows you to pay for only the services you’re using. Not only are you getting accounting services at a lower cost, but you’re also saving on employee benefits, insurance, payroll, tax, etc.
• Talent Gap: Finding qualified accountants in the US, UK, Australia, etc. is getting harder. Outsourcing allows you to source talents trained on global financial reporting standards (GAAP, IFRS, etc.) and are proficient at using advanced accounting software programs from anywhere in the world.
• Scalability: When your lower-level tasks are handled by competent third-party professionals, your in-house human resources are better deployed to high-impact projects, helping you focus on leading the firm into your dream future.
• Flexibility: Outsourcing helps your recruitment strategy by allowing you to add more staff during periods of increased demand. This helps your firm manage short and long-term workload demands confidently.

 

India vs. Philippines – Key Differences in Finance Outsourcing

India: India’s 400,000 accounting professionals are certified and trained in international financial reporting standards like GAAP and IFRS. This qualifies them to provide outsourced accounting services globally.

As the second-largest English-speaking country in the world, their language skills are strong enough for the communication and collaboration needs of back-office operations like outsourced finance and accounting services.

 

The Philippines: The Philippines is another thriving hub for business process outsourcing. Their culture and communication styles align with Western markets.

This makes the country a great destination for outsourced services in client-facing roles like sales, customer support, and telemarketing.

Although they are also proficient in financial and accounting, their education curriculum is less emphatic in complex financial reporting standards like IFRS.

 

Cost Comparison: India vs. Philippines

India: On average, accounting BPO in India costs an average of $10 per hour. Monthly rates cost between $2,500 per month ($25,000 – $30,000 annually), depending on the type and complexity of the service.

With $2600/month, Finsmart Accounting, an accounting BPO in India, will provide a dedicated professional with 160 hours of work per month to:

• Update the client’s book of accounts.
• Do bank and credit card reconciliation.
• Close the books of accounts every month.
• Etc.

 

Its hourly rate is $20 per hour.

 

Philippines: In the Philippines, hourly rates cost around $25/hour. Monthly rates are available for an average of $3,500 ($40,000 – $50,000 annually) depending on the type and complexity of the service.

The cost of outsourced accounting is lower in India because of the larger pool of accounting professionals (compared with the Philippines) and lower cost of living.

Cost-effectiveness for Startups vs Enterprises

India’s BPO market size and the technological advancement of its outsourced professionals make it a better and more cost-effective outsourcing destination for enterprise-level clients. That is why the Big 4 accounting firms outsource and invest heavily in India, further strengthening accounting BPO in India.

With a smaller finance and accounting market and a less mature accounting technology ecosystem, the Philippines is better positioned to serve startups and SMEs than enterprise businesses.

Time Zone Compatibility

India is 11:30 minutes ahead of the United States of America (USA), and four-and-a-half hours ahead of the United Kingdom (UK).

The Philippines is 12 hours ahead of the United States of America (USA), and seven hours ahead of the United Kingdom.

Service Range & Specializations

Here’s how both countries stack up against each other in terms of service range:

• Bookkeeping: This is common in both India and the Philippines.
• Accounts Payable/Receivable: This is more common in both countries.
• Payroll: This is common in both countries, but the Philippines emphasizes this service more because it is more communication-intensive than Bookkeeping.
• Tax Prep: As a specialized service, tax preparation is more emphasized in India as a key service for multinational corporations. It is an emerging service in the Philippines.
• Audit Support: Not as common as the service above, but thanks to its technological advancement, Indian BPOs provide this service to enterprise clients. Outsourced audit services are less common in the Philippines.

Security, Compliance & Data Protection

India: The Institute for Chartered Accountants (ICAI) provides the contractual safeguards and IT infrastructure to enable Accounting BPOs in India to manage your client’s information in line with international regulatory standards.

This has enabled its outsourcing hubs in Mumbai, Pune, Bengaluru, etc., to attract clients from even the Big 4 accounting firms.

 

The data protection frameworks in India include:

• The Digital Personal Data Protection Act, 2023 (DPDP Act): regulates digital data processing in India. It requires firms to receive consent before digital data can be obtained and processed.
• The Information Technology Act, 2000 (IT Act) and SPDI Rules: require data confidentiality, encryption, and access control protocols when handling sensitive data.
• ISO Certifications for Data Protection: while not compulsory, most Indian BPO firms are encouraged to adopt ISO certifications (such as ISO 27001 and ISO 27701) to ensure secure data handling in compliance with regulations like the GDPR. This helps to protect your client’s financial data.

 

The Philippines: The Philippine government has also invested heavily in IT infrastructure to make the Accounting BPO industry in the Philippines more secure.

 

In places like Manila, Cebu, and Davao, the government has created an environment, remote work legislations, and special economic zones that make it easy for accounting BPOs in the Philippines to thrive.

 

Its data protection regulations include:

• The 2012 Data Privacy Act: prevents the unauthorized access and processing of personally identifiable information in line with international standards.
• The 2012 Cybercrime Prevention Act: regulates data management and transfers in the Philippines.

 

Industry Use Cases & Strengths

India: Best in Tech, SaaS, E-commerce

When it comes to technical and analytic services (like IT and Engineering), you have to give it to the Indians.

The country’s investments in developing its tech hubs and IT infrastructure have enabled its teeming graduate population to gain real-world experience (after rigorous academic studies) in finance and accounting.

With hundreds of thousands of graduates entering the job market every year, the accounting industry is highly competitive in India. This competition makes the average Indian accounting professional go the extra mile to update their accounting skills, proficiency in technology, and client service.

Philippines: Best in Customer Support, Hospitality

The Philippines’ BPO industry is better equipped for client-facing services, such as sales, customer services, and telemarketing, where they address customer inquiries and challenges to promote brand loyalty.

 

There is also a sizeable number of outsourced accounting professionals in the Philippines, although not as many, and as trained in international standards as the average outsourced accounting professional in India.

 

Pros and Cons of Outsourcing to India

India: PROS

The benefits of outsourcing your finance and accounting services to India include:

• Cost Savings: the average salary of an accountant is $4,680 a month in the US, £2,651 ($3,525) a month in the UK, and AUD5,536 a month (3,521 USD) in Australia.

Using an outsourced accountant in India costs around $2600 a month, and you don’t have to pay for a full month if your accounting needs do not warrant a month-long engagement. You can pay as low as $20 per hour for a dedicated accounting professional to meet your accounting needs.

• Language of Business: English is the language of business communication in India. This makes it easy to communicate and collaborate (especially in writing) on projects.
• Improved Productivity: The time zone difference between India and the US, UK, and Australia presents the opportunity to work around the clock. You can assign work today and wake up to completed tasks. This helps you to meet client deliverables much faster.

 

India: CONS

The major challenges of outsourcing to India include:

• Cultural Differences: Indians are generally more withdrawn and indirect in their interactions, which may negatively affect their ability to give and receive feedback.
• Data Security: If you don’t choose a reputable outsourcing partner, your data security is at stake.

 

Pros and Cons of Outsourcing to the Philippines

Philippines: PROS

The benefits of outsourcing to the Philippines include:

• Cost Efficiency: where hiring an in-house accounting staff will cost you an average salary of $4,680 per month in the US, £2,651 ($3,525) per month in the UK, AUD5,536 per month (3,521 USD) in Australia, it costs less than $3,000 per month to use Filipino accountants. Hourly rates are around $25 per hour.
• Skilled Labor: With government investments in the business process outsourcing industry (such as the IT-BPM Roadmap 2028), Filipino talent enjoys professional training through thriving talent hubs and internships, which improve their skills and resourcefulness.
• High English Proficiency and Cultural Affinity: The Philippines and American cultures are significantly similar, enabling them to provide sales and customer support services to American firms.

 

Philippines: CONS

The challenges with outsourcing to the Philippines include:

• Less IT-Oriented than Indians: Compared with the Indians, Filipinos are less proficient in IT and analytical skills, which are critical in finance and accounting. Plus, there’s less emphasis on global accounting standards like IFRS.
• Data Security Risks: Outsourcing anywhere limits your control over the security of your client data. You have to rely on the effectiveness of your outsourcing partner’s security measures.
• Potential Disruptions: The Philippines has a history of natural disasters that affect productivity.

Final Thoughts: Which Country Is the Better Fit for You?

With India and the Philippines providing some of the best talents to the business process outsourcing (BPO) industry, your outsourcing needs and the complexity of your requirements should inform your decision.

India seems better for finance and accounting outsourcing services, but the Philippines is better for outsourcing client-facing roles.

 

Here’s a summary of our findings:

Attribute	India	Philippines
Service	A wider range of finance and accounting services, such as bookkeeping, tax preparation, audit, financial analysis, and finance and accounting technology like NetSuite, SAP, and Oracle. More skilled in advanced accounting tasks like compliance and financial modeling.	Offer lower-level accounting expertise in bookkeeping, AP/AR, payroll, etc. Communication and cultural alignment with Western markets make them ideal for customer-facing roles like sales, customer support, and telemarketing.
Cost	Depending on the skill level and location within India, finance and accounting roles are accessible at $10-$45 per hour.	Between $5-$20 per hour, depending on the skills required.
Talent	400,000+ chartered accountants and up to 1.5 million finance professionals with a strong academic background and knowledge of GAAP and IFRS.	200,000 CPAs and up to 500,000 finance professionals know GAAP but are unskilled in other global standards like IFRS.

 

However, ultimate success in finance and accounting outsourcing depends on your chosen outsourcing partner. That is why we invite you to consider Finsmart Accounting.

 

Based in Pune, one of India’s BPO hubs, Finsmart Accounting provides accounting professionals to help you meet finance and accounting outsourcing workload needs.

 

Here’s how it works:

• Once you subscribe to our service,  we’ll assign you one (or more) dedicated accounting professionals based on the type and complexity of your needs.

 

Our CPA-level accounting professionals have experience in global accounting standards, so you wouldn’t need to train them afresh. You may only need to teach them about your firm’s unique workflows.

 

• You won’t have to worry about committing to a long-term relationship. Our subscription model allows you to use our services for as long (and as often) as you need.

 

• Our dedicated professionals will work with the rest of your team in the systems you already use for work. This gives you visibility into their work and more control of your client information.

 

Want to discuss your needs today to see if we are a good fit? Click here to book a free consultation with us.