10 Common Myths of Outsourcing for Accounting & CPA Firms

Outsourcing and offshoring have become integral strategies for accounting and CPA firms, aiming to streamline operations and enhance efficiency. These approaches also enable firms to expand their global reach, driving growth and boosting profitability. However, despite their widespread adoption, several myths and misconceptions persist around outsourcing and offshoring in the accounting industry.
 
From concerns about job loss and compromised data security to questions about quality control and cultural differences, we will address the most prevalent myths surrounding outsourcing and offshoring. We will delve into the realities behind these misconceptions, exploring how these strategies can actually enable accounting and CPA firms to thrive in an increasingly globalized marketplace.
 
In this article, we aim to debunk these common myths and shed light on the realities of outsourcing and offshoring for accounting and CPA firms. By examining the facts and dispelling misconceptions, we hope to provide a clearer understanding of the benefits and potential impacts of these strategies on the industry.

Debunking the 10 Most Common Outsourcing & Offshoring Myths:

#Myth1: Outsourcing and offshoring are the same

Reality: 

There is a common misconception that outsourcing and offshoring are synonymous but have distinct differences. It's important to understand these nuances to make informed decisions. Outsourcing refers to delegating specific tasks or functions of a company to an external service provider. This can occur within the same country or across borders. Outsourcing involves hiring a third party to handle certain aspects of a business previously managed internally. On the other hand, offshoring specifically involves relocating operations or tasks to a foreign country. It entails moving a part of a company's operations or functions to another nation, typically for cost savings, access to specialized skills, or market expansion.

For example, a U.S.-based accounting firm outsourcing its tax preparation work to a local service provider differs from offshoring the work to a team in India. Understanding these differences is crucial for making informed decisions.
 

#Myth 2: Outsourcing only means cost-cutting for an accounting firm

Reality: 

While cost reduction is a significant advantage of outsourcing and offshoring, it is not the sole purpose. By offshoring accounting tasks, firms can save time and focus on more critical responsibilities like advisory services. Offshoring provides access to a skilled workforce that can handle routine accounting tasks. A CPA firm can delegate bookkeeping tasks to an offshore team, enabling their local team to concentrate on high-value client engagements. The benefits extend beyond cost savings, allowing the firms to optimize operations. 

#Myth 3: Outsourcing or offshoring is only viable for large accounting firms

Reality: 

This is a common misconception. In fact, outsourcing and offshoring are particularly advantageous for small accounting firms. Small firms often face resource constraints and need stability in their operations. Offshoring allows them to access specialized talent and services without investing heavily in hiring, training, and infrastructure. It provides a flexible and scalable solution for firms of all sizes, allowing them to focus on growth and client satisfaction. 

#Myth 4: Outsourcing or offshoring puts my client's data at risk

Reality: 

Concerns about data security are valid but can be addressed with proper due diligence. It is essential to partner with a well-trusted offshore firm like Entigrity. As one of the trusted offshore staffing partner, Entigrity holds an ISO 27001:2013 certification and adheres to GDPR regulations. They place a high emphasis on safeguarding data privacy and security, having implemented robust IT and privacy policies. These measures guarantee the utmost confidentiality of client data. 

#Myth 5: The output is not up to the mark when outsourcing or offshoring accounting tasks

“When we tell accounting firms that the pandemic has resulted in a notable shift toward offshore staffing, they are still skeptical and cautious of offshore staffing! Several firms have expanded their horizons and are now considering offshore outsourcing from a new perspective.”

- Shawn Parikh, Founder & CEO of Entigrity Solution LLC.

Reality:

For any accounting firm, quality is crucial regardless of whether tasks are outsourced or handled in-house. Reputable offshoring service providers like Entigrity implement multiple review layers and a buddy system, where an onshore team member guides and supports the offshore team. This collaborative approach ensures continuous improvement, and the output meets the desired quality standards. The offshore team is dedicated to delivering exceptional work that aligns with the firm's requirements and expectations.

#Myth 6: Accounting firms can instantly reduce costs while Outsourcing/offshoring

Reality: 

Offshoring is not a quick fix for solving all financial challenges overnight. It requires some time for the offshore team to understand the project flow and execution processes. Initial weeks to months might be spent on knowledge transfer and adjustment. It is advisable to start with a smaller offshore team to establish a working model and gradually expand based on success and comfort. Patience and effective communication are key to realizing the long-term cost benefits of outsourcing/offshoring.

#Myth 7: Offshoring means more jobs are being sent overseas

Reality: 

Offshoring is often misunderstood as a practice that directly hampers local employment. However, offshoring can contribute positively to the global economy by creating opportunities for skilled professionals in the local country and the offshoring destination. It allows firms to tap into a diverse talent pool and build mutually beneficial partnerships that can lead to innovation and growth for all involved.
Offshoring can also benefit the onshore staff by providing opportunities to upgrade their skills and work on more value-based tasks. When certain routine or repetitive tasks are offshored, it frees up the onshore employees to focus on more strategic and complex responsibilities that require critical thinking, creativity, and decision-making skills. This shift in job roles can enhance job satisfaction and professional development for the local workforce.

It is important to recognize that offshoring is a strategic decision made by firms to optimize their operations and remain competitive in a globalized economy. While it can involve the relocation of certain job functions, it also opens up new avenues for skill development and innovation, benefiting both the local and offshore workforce.

#Myth 8: Outsourcing can negatively affect the country's economy

Reality: 

The impact of outsourcing on the country's economy is complex. While outsourcing may lead to job displacement in specific sectors, it also fosters competitiveness and enables firms to allocate resources strategically. Moreover, outsourcing can help local firms focus on higher-value activities and contribute to overall economic growth. It is crucial to consider the broader financial perspective when evaluating the implications of outsourcing. 

#Myth 9: Long-term partnerships can't be established with outsourced accounting partners

Reality:

Building long-term partnerships with outsourced accounting partners is entirely feasible. By selecting the right outsourcing provider, firms can establish relationships based on trust, professionalism, and shared goals. Clear communication, ongoing collaboration, and regular performance evaluations contribute to successful long-term partnerships. The key is to choose a provider like Entigrity, known for its commitment to client satisfaction and the ability to align with the firm's values and vision.
 

#Myth 10: Accounting outsourcing requires a sophisticated IT infrastructure

Reality: 

Due to worries about their own IT capabilities, many firms are hesitant to contemplate outsourcing accounting services. Firms think that making a big investment in top-tier IT infrastructure is necessary to connect with outsourced service providers. This belief, however, is untrue and does not take into account the state of technology today or how accessible it is.
Numerous communication tools are now widely accessible and reasonably priced in today's rapidly changing technology environment. These tools are easily accessible to small accounting firms, enabling them to create easy connections with their outsourced accounting service providers. There are several solutions that can be tailored to vary financial limitations, from video conferencing platforms to collaborative project management software.

Still not clear about the myths surrounding outsourcing and offshoring for accounting and CPA firms? You can find all the information you need regarding offshore staffing in Entigrity FAQ.

Conclusion:

Outsourcing and offshoring for accounting and CPA firms offer numerous benefits beyond cost reduction. By dispelling the myths surrounding these practices, firms can make informed decisions that drive operational efficiency and growth. 

Entigrity™ is a trusted offshore staffing partner to 725+ accountants, CPAs, and tax firms across the US, UK, and Canada. Our flexible and transparent hiring model gives helps firms of all sizes to hire staff for accounting, bookkeeping, tax preparation, or any other task for 75% less cost. As a firm 'run by accountants, for the accountants,' Entigrity captures the hiring needs of accounting firms most precisely, providing staff that works directly under your control and management; still, you are left with the least to worry about compliance, payroll taxes, overheads or any other benefits. To offshore accounting services, bookkeeping, Tax, and audit services, visit us.