In a digital, connected world, more and more businesses are looking to leverage opportunities for outsourcing various business functions. So, what are the benefits, and what could outsourcing mean for an accounting practice?
The rise in cloud-based technology has brought with it greater accessibility to outsourced services for businesses globally. No longer restricted by geographical borders, the desire to cost-save, access specialized skills, increase efficiency, reduce overhead costs, and gain a competitive advantage are big draw cards for companies, who otherwise may struggle to scale.
What is outsourcing?
Outsourcing simply means engaging an external agency, outside of your accounting practice, to perform certain functions across your operations. These could be individual tasks or projects, specific areas of operation, or even services that are outside your own expertise (for example, marketing.)
For many practices, it’s a smart move. It opens up a world of resources that goes beyond your own team’s capacity or skills. In fact, the use of outsourcing is more common than you likely think, with 68% of businesses outsourcing some aspect of their operations. And as the world gets smaller in terms of ease of transport and communication, outsourcing will continue to be a major part of a successful business model.
For some, this means looking overseas—what’s referred to as offshoring—the benefits of which are predominantly to minimize the challenges with wage cost and talent pooling for local accountants while still having access to qualified, professional, and highly motivated team members. Offshoring has the distinction of still retaining control of the ongoing workflow.
Why consider outsourcing your accounting practice?
To remain competitive—and relevant—accounting practices must seek out more cost-effective yet profitable ways of delivering to their customers. Here are some reasons for outsourcing to consider:
- Outsourcing is economical
It’s generally more cost-effective to engage a provider who is specialized in offering a particular product or service, rather than attempting to offer the solution in-house and face higher wage and overhead costs. It also means you can offer a more attractive price tag for clients while keeping profit in your pocket.
- Outsourcing improves business focus
Tasks that an accounting practice chooses to outsource are those that typically takes time and resource away from the core business, where often the right tasks are being worked on by the wrong people. By outsourcing, accountants can instead focus on customer relationships and business development – in other words, growth.
- Outsourcing creates a better-quality result
Outsourcing to professionals ensures you get access to world-class accounting talent with a global knowledge base. They’re focused on offering a niche service without the distractions that often come from also juggling wider business operations. The benefit for the accounting or bookkeeping firm is matching the right level of experience and skill level against the right tasks. Preparation, reviews, and client management can all be split out accordingly.
- Outsourcing supercharges capacityOutsourcing gives you the capacity and freedom to keep your accounting practice agile. It gives you quick access to a skilled workforce, freeing up your internal resources and easing the crunch while reducing customer frustration and keeping you a step ahead of competitors.
While outsourcing has previously been seen as primarily a cost-saving measure, the benefits go beyond that, providing strategic benefits that can help accounting and bookkeeping practices succeed in a competitive global market. Some of the most common benefits include:
- Faster delivery
- Increased profits
- Increased capacity
- Space to focus on core competencies
- Reduced cash outflow
- More predictable costs
- Alignment of tasks
What can you outsource?
It’s possible to outsource just about any aspect of your practice if it makes sense from an operational or financial perspective. From core services, payroll and administrative support, IT, accounting to setting up a new bookkeeping or advisory division, outsourcing allows you to operate with the capacity of a larger enterprise without the costs that may come with a large in-house team.
Common types of outsourcing
Depending on the type of work you need support with, there are different approaches to outsourcing that could work for your accounting or bookkeeping business. These include:
- Professional services outsourcing
As your business grows, it’s likely you’ll have a need for specialized services for HR or recruitment, data entry, or dealing with the legal side of your business. These are all examples of professional services that can be managed with the help of external business support.
- Project style outsourcing
Some businesses may choose to outsource work on a project-by-project basis rather than on-going work. This allows you to go through a backlog of work quickly and cost-effectively without having to hire a staff. There would be no need to train staff, and you know the work will be completed for a fixed cost.
- Business Process Outsourcing
Business process outsourcing involves contracting specific functions that support your business to an external supplier. An example we’re all likely familiar with is a call-center, which is outsourced to a separate provider yet acts on behalf of your business with customers. Or it could be that a company relies on a distributor in order to get its products in front of consumers.
- Dedicated offshoring with a global team
A more strategic option is to work with a provider who has local support but offers you dedicated offshore staff. This model provides the best of both worlds where you can focus on workflow and where the offshore provider is the legal employer of the staff. You can engage the provider who then offers local and offshore management and has the specialist skills to take care of all the offshore business. Most importantly, these team members are dedicated to only work for you, so as they grow, so do you.
For all of these types of outsourcing (or see more examples of outsourcing here), the outcome is the same—reduced overheads for your business while getting high-level support from experts in their field.
Is outsourcing right for your accounting practice?
While there are benefits to outsourcing for most businesses, it doesn’t mean it’s necessarily right for all. Outsourcing could be a great option for you if:
- You want more time to spend on customer relationships, business development, or business growth initiatives.
- You find yourself doing mundane or repetitive tasks that don’t bring more money through the door.
- You want to grow your firm but don’t have the capacity to take on new clients.
- You want to offer faster, improved, or more cost-effective services to your clients in order to separate yourself from your competitors.
- You know that your time is better spent on productive tasks rather than ones that take you away from growing your business.
- You are planning to run your business core applications in the cloud.
Getting started with outsourcing
Finding the right outsourcing company is key to a healthy and productive relationship for both businesses. Taking the time upfront to establish this relationship will be an important factor in your success with outsourcing, but once that’s done, the benefit to your business bottom line will be significant.
Before engaging an outsourcing company, the first step is to take a closer look at your business objectives, so you can determine which areas of your business could be outsourced in order to help you achieve them.
Be careful, however, to not fall into a common trap: knowing the opportunity is there, yet not taking the next step, and ending up getting left behind. Full-service providers will often have consultants available for a free consultation who can openly discuss their model and will provide you with client examples of success.
Remember, not all outsourcing companies are created equal. So, take your time to research providers who offer specialized services suited to your industry and your geographical market.
If you’d like to know more about how a global team can benefit your firm, get in touch with our consultation team by booking a free meeting.