Over the past 20 years I’ve been involved with a dozen or so small/medium sized businesses in various industries, as either a founder, advisor or member of the management team. In every company I’ve always leveraged outstaffing using a Team Extension Model (TEM) to grow my businesses. Now at Accsurant I’ve built an accounting outstaffing management business that takes advantage of my previous experience as a business owner.

Before I go over the difference between outsourcing and outstaffing, you need to understand how you can benefit from choosing this route.

Capacity & Capability

Do you remember the HBO series “Silicon Valley”? It was all about the challenges faced by a young tech entrepreneur launching his company, and his need to constantly “pivot” what they did in order to meet new challenges. Pivoting is an important ability to have, particularly given today’s climate. To successfully pivot, you need to overcome two challenges:

• Capacity: If you run your business efficiently, you should have all your existing staff utilized at 90 to 110 percent. To assign someone or yourself to take on a new initiative, you might jeopardize current projects. Do you want to take that risk?
• Capability: As an example, let’s say most of my staff is doing bookkeeping. My new accounts are looking for end of month financial statements specialized in nonprofits. Do I do it myself and develop the capability in-house, or do I hire someone new or bring in a team?

Hiring Costs

As the previous owner of several small companies I know that cash flow could be a challenge and hiring was always a significant financial decision. I learned the hard way that payroll taxes and other taxes for new employees were substantial. Over time the indirect costs became a tremendous expense.

Finding the right person takes time. As a business owner or managing partner, we are already swamped, and the last thing we want to be bothered with is spending time hiring a new person. Yes, you can spend time looking for an agency to do this, but it will cost you a substantial amount of money. Besides, you still need to be involved, and as you add more staff, you spend more time.

Cost Arbitrage

Ninety percent of the things that we find in our home are manufactured abroad. It’s not a good or bad thing; it’s globalization. The same thing goes for services. Twenty years ago, CompUSA sold routers configured according to the ZIP code where the retail store was located. No need for services and an Indian team troubleshot any technical problems. At about the same time, large companies started to migrate their accounting departments overseas. Only large companies could afford the technology platform and management team to support these outsourcing models.

For the past two years, I talked with more than 200 large accounting firms, and they all have staff overseas. Large firms offset the workflow platform and the necessary mid-management cost with large scale teams.

Technology Levels the Playing Field

At Accsurant I’ve create a system that allows small/medium size companies to implement virtual dedicated teams with no initial investment and low recurring cost. On average, an FTE will cost you 60% less than an on-site resource.

Our resources can be productive from the first day at work. As a former business owner, I didn’t have the patience to spend too much time to train a junior. Unlike large companies that could afford to ramp up a new hire through a training program, I needed people to jump in right away.

Over the years, I created several startups, and all of them were self-funded from day one; I subcontracted close to a hundred teams. At the time, none of the existing models met my need as a small business, and I came out with a model that I call outstaffing/dedicated teams. In my opinion, it is the best model for a small/medium size accounting firm looking to add capacity and capability to support its existing team. Most offshoring companies offer an outsourcing model because they were large IT teams and, today, are repurposing the same model for accounting. The difference between the two…

Outsourcing

An outsourcing company supports a project-based business model. The accounting firm (client) entrusts the outsourcing company with the entire project from start to finish. The accounting firm doesn’t have access to the offshore team, and most of these resources are shared with another client (accounting firm). This model might be a good fit for a large accounting firm with a well-established process they want to outsource. For example, accounts payable on a large scale. If you are a small/medium size company and you decide to use this model you are more likely to end up with whatever process the outsourcing company uses; and most of the time as a result you ask for a “dog” and you get a “cat.”

Traditional Outsourcing Model

Outstaffing Team Extension Model (TEM)

A TEM model is remote employment where a hired staff works full time for an accounting firm (client) but is legally employed by the staffing company. In this case, Accsurant acts as an employer. We are responsible for wages, bonuses and equipment. You, the accounting firm (client) provides the staff with tasks and assignments.

As a former small company owner, the outstaffing model makes more sense because the hiring process and HR functions are done by someone else, while the remote team is entirely at your disposal.

Your remote team acts as part of your in-house team. They can be managed by your in-house people, or you can use a remote manager.

Team Extension Model

In my customized model, I suggest a remote manager working directly with your staff. Also, I tweaked the existing model to address the needs of small/medium firms by adding a US based account manager and account executive, as well as a technology platform to support communication and track performance.

Accsurant Team Extension Model

These additions will:

• Provide the ability to hire great professionals as per your specific needs and requirements
• Give you full control over the general accounting process
• Offer full access to any of the team members
• Ensure high-quality delivery because we implement a communication channel as well as a work process

Conclusion

Whether your company is growing, or you need to lower your operating costs, a Team Extension Model might be an option. My experience as a business owner with small to medium sized businesses at different levels of maturity can help you find the right solution, and I can guarantee that if you ask for a cat, you will get a cat and not a dog.

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