How to Know If Your Client Accounting Services Practice is Ready for Offshoring
Over the past year, I’ve had an increasing number of conversations with the leaders of Client Accounting Services practices who are contemplating an offshore solution to reduce costs and address the consequences of the “Great Resignation”. I’ve discovered there are many misconceptions about the notion of offshoring, and many firms are simply not prepared to make the leap into offshoring.
More than thirty years ago, the Big Four firms all established offshore Business Process Outsourcing (BPO) to take advantage of a well-educated yet lower cost work force in countries such as India. Fast forward to the 2020s, and an increasing number of the top 400 CPA firms are looking at following suit. The need has become even more acute:
- Increased staff wages in 2021 and 2022 are putting pressure on margins
- It’s more and more difficult to find good talent
- Retaining staff is nearly impossible in a hyper-competitive job market
These are the realties all firms face in 2022, but while offshoring can provide the solution for many firms, it works best when the firm and offshoring organization are aligned. The relationship must be more than a transactional one. Here are some characteristics of an aligned process:
- Process based workflow—many of the firms with whom we’ve spoken admit there is little consistency in the workflow across their CAS client portfolio. This lack of defined and repeatable process causes inherent inefficiencies for both the offshore company and the firm. Successful offshore engagements, like the ones experienced by Accsurant clients, are the result of upfront planning, process mapping, and communications that leave less to chance or error.
- Management Reporting—not all hours are created equally. Understanding the functions performed, the amount of time it should take for a given client, and constantly seeking ways to improve those metrics is a far better solution than the “body shop” process found in some offshore resources.
- Management of Turnover—this applies to both the offshoring firm and the US CPA firm. Turnover, especially in situations in which there are no consistent processes—is a recipe for error and unhappy clients. Accsurant has maintained a turnover rate that is half that of US CPA firms in 2020, and likely even better in 2021.
- Communications—the difficulty in offshoring communications, in our experience, is as much a function of culture as it is of language. That’s why our offshore professionals, most of whom have earned CPA or MBA equivalencies, also receive career coaching that includes cultural training on dealing with US based clients. We have also recently started that same training for our US clients so they can better understand and manage their offshore resources (and their own increasingly diverse workforce in the US).
These areas are not the exclusive contributors to success, nor are they a magic wand to fix everything. However, based on decades of offshoring experience, both in providing those services today, and as a buyer of offshoring services in a prior life, these are some of the success indicators that firms like yours should consider when contemplating the plunge into offshoring.
Please contact us for a one hour no-obligation conversation about whether offshoring is the right solution for your firm’s CAS practice.