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Valay Parikh
The accounting landscape is evolving rapidly, and outsourcing and offshoring have become prominent strategies in the industry. Although firms can gain a lot from outsourcing or offshoring accounting services, there are a few possible drawbacks.
Outsourcing accounting services has several potential problems. Still, the main ones include communication difficulties, quality issues, client data security & privacy, and on top of this, India, Philippines, South Africa, or Mexico? Which place to go for outsourcing or offshore accounting services?
In this comprehensive blog, we will delve into the top 10 concerns surrounding outsourcing and offshoring for accounting firms. We'll explore the advantages and disadvantages of outsourcing to provide a holistic understanding.
Accounting firms often grapple with ensuring data security and privacy when considering offshore accounting services. The potential inability of offshore partners to effectively protect client data is a significant disadvantage of outsourcing accounting tasks or opting for offshore accounting solutions.
Data security and privacy are non-negotiable in accounting. The fear of data breaches and the mishandling of sensitive financial information can be a major drawback of outsourcing or offshoring. To mitigate this concern, it is imperative to choose an outsourcing partner with stringent data security measures and a proven track record of safeguarding sensitive data.
At Entigrity, we recognize the importance of securing our clients' data and nurturing their trust. Our data security policy is built on three key pillars: People, Processes, and Practices. By adhering to rigorous data security measures, we have effectively minimized risks, boasting an impeccable record of zero data breaches over 9+ years in operation. Our data security protocols align with ISO 27001:2015 standards, SOC Type II Certifications, and GDPR Compliance, ensuring the highest level of protection for our clients' valuable data.
One of the primary concerns for accounting firms considering outsourcing or offshore accounting solutions is how their clients will react to the change. Open and honest communication with clients about the decision can help build trust. It is essential to emphasize that the move is aimed at providing better and more cost-effective services, ultimately benefiting the clients themselves.
1. You are sending “Local Jobs Offshore.”
2. Poor work quality
3. What about the confidentiality of my (client's) data?
4. No specific reason, but just concerned about perception
We create a comprehensive blog around “What would clients think about offshoring?”
When you've made the decision to explore remote staffing solutions, one important step is to communicate this change to your onshore team. It's natural for them to have questions and concerns, especially if they haven't addressed their doubts yet.
The most common question they may pose is, "What will happen to my job?" This concern is entirely valid. Often, when people hear terms like "offshoring" or "outsourcing," they associate them with large multinational corporations that shifted many jobs overseas solely to cut costs. To successfully transition to a remote staffing model, it's crucial to gain internal support.
One of the significant offshore accounting challenges is the failure to effectively communicate the integral role of the offshore and onshore teams in the smooth operation of any accounting firm.
Internal buy-in is crucial for a successful transition. Addressing your team's concerns, explaining the pros and cons of outsourcing accounting services or having an offshore staff, and involving them in the decision-making process are essential. The insights and cooperation of your team can be invaluable when choosing the right outsourcing partner.
Key concerns that your onshore team may have include:
Job Security: Worries about the stability of their positions.
Lack of Clarity: Questions about how the change will impact their roles and future within the organization.
We created a comprehensive blog around “What would my staff think about offshoring?”
Selecting the right offshore destination is a pivotal decision. The choice should factor in language proficiency, time zone compatibility, cost-effectiveness, and the availability of quality talent. Each location has unique advantages and considerations that should align with your firm's requirements.
Accounting firm owners often express concerns about the limitations of outsourcing or offshoring accounting tasks, particularly related to the quality of talent they find offshore and the vetting processes of their offshore partners.
Ensuring the quality of talent is a legitimate concern when outsourcing or offshoring. It is crucial to collaborate with outsourcing partners that have rigorous vetting processes in place. Regular training and transparent performance metrics are essential components to look for in an outsourcing partner.
Entigrity offers a solution to this predicament. We provide access to pre-vetted top-tier talent from India and the Philippines, enabling you to build your offshore team with confidence. Our meticulous vetting process ensures the provision of high-caliber professionals perfectly tailored to your specific requirements.
The primary drawback of outsourcing or offshore accounting lies in the inability to assess the capabilities of the remote workforce effectively.
Evaluating offshore talent is an ongoing process that necessitates clear metrics and regular performance assessments. Your outsourcing partner should provide the tools and mechanisms for evaluating and monitoring the quality of work consistently.
When appraising offshore accounting talent, several key factors should be taken into consideration, including:
Credentials: Assess whether the accountants hold the necessary licenses and certifications.
Experience: Evaluate the relevance of the accountants' prior experience and their dedication to quality work.
Communication Skills: Gauge the effectiveness of the accountants' communication skills.
Reviews: Take into account feedback from previous clients to gauge the capabilities of the offshore company.
Track Record: Examine the offshore service provider's past performance in providing accounting and CPA services.
Industry-Specific Knowledge: Determine whether the service provider possesses specialized knowledge relevant to your industry.
Skill Set: Ensure that the skill set of the offshore team aligns with the specific requirements of your project.
A successful offshore outsourcing partnership is akin to a committed, long-term relationship between two businesses. Finding the right partner requires a meticulous assessment of various offshore service providers. Businesses have realized that with the right offshore partner, they can lower development costs, expedite time to market, delegate internal resources to focus on core competencies, and access top-notch talent without the burdens of recruitment.
Selecting the right outsourcing partner is a critical decision that can significantly impact the success of your outsourcing/offshoring endeavor. Look for a partner with a strong track record, positive client reviews, and industry-specific expertise. Assess their communication abilities, data security measures, and compliance standards.
We created a comprehensive blog around “How to assess and select the perfect accounting offshoring partner”
Straightly jumped into the offshoring world, accounting firm owners need to have detailed research on the pros and cons of outsourcing accounting services or offshore tasks. The choice between outsourcing and offshoring can significantly affect the outcome. Outsourcing involves hiring external firms to handle specific tasks, whereas offshoring involves relocating tasks to another country. The decision should align with your firm's unique requirements and strategic goals.
Scaling an outsourcing or offshoring strategy is a valid concern, and it is advisable to plan for scalability from the outset. Understanding what the transition journey will look like is essential, including aspects like training, data migration, and ongoing support.
Managing the transition to outsourcing or offshoring can be a significant concern for accounting firms. This includes redefining processes, adapting to new workflows, and aligning teams both onshore and offshore. Firms need a comprehensive change management strategy to ensure a smooth transition, minimize disruptions, and maintain service quality throughout the process.
While outsourcing and offshoring offer numerous advantages, addressing concerns regarding data security, client reactions, and team buy-in is paramount. The choice of the offshore location, the quality of talent, and the evaluation processes are equally vital considerations. By partnering with the right service provider and following a well-planned journey, accounting firms can effectively navigate these concerns and reap the benefits of outsourcing and offshoring.
1. Should I Outsource My Accounting?
Ans: Outsourcing accounting should be based on your specific needs, available resources, and strategic goals. Outsourcing can help reduce costs, enhance efficiency, and provide access to specialized expertise. It is crucial to assess your firm's requirements and explore the potential benefits before making a decision.
2. Why Outsource Accounting?
Ans: Outsourcing accounting services offers several advantages, including cost savings, access to specialized skills, scalability, and increased focus on core business activities. It can make your firm more competitive and efficient, improving client satisfaction and growth.
By addressing these concerns and gaining a comprehensive understanding of the pros and cons of outsourcing accounting services, accounting firms can make informed decisions and harness the full potential of outsourcing and offshoring.
Entigrity™ is a trusted offshore staffing partner to 725+ accountants, CPAs, and tax firms across the US and Canada. Our flexible and transparent hiring model 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.
With more than a decade of experience, Valay serves as the Vice-President of Entigrity Remote Staffing. Valay leads the India-centric Operations for the company, guiding its strength to unprecedented scales, with his guidance and leadership. Valay is a qualified Chartered Accountant himself. Beginning with public practice, he has served as a consultant and adviser to many small and mid-size businesses. Later on, he went on and co-founded Entigrity with Shawn. Valay has been phenomenal in building India Operations, with his core focus being on identifying and developing Indian talent pool for the company. Utilizing his experience, he developed and built robust HR policies and framework, developed strong training methodologies, and help clients with Financial Reporting, Business Analytics and Business Intelligence, thus creating strong and efficient processes for the clients.
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