Offshore Staffing Strategies - One Location vs Diversification

Hiring offshore staff is now a crucial process for accounting firms during a time of immense shortages in the profession. It ensures operational efficiency; the cherry on top is the quality of these associates' work produced. This trending approach of offshore accounting services is necessary for sustaining growth and allows the firm to remain competitive and a dynamic CPA firm.

Many factors can affect the process of offshore staff. Have you ever considered whether you have a one-location or diversified offshore team?

If you are still wondering about this topic, here are the positive and negative points and a severe recommendation.

One-Location vs Diversified Offshore Staff

One-location simply means hiring members from a single location or office. This promotes faster communication but lacks variability. 

On the other hand, a diversified team in offshore accounting involves hiring professionals from different geographical locations. It has cost-saving and encourages a broader skill set.

Pros & Cons of One-Location Offshore Staff Team

Pros

1. Effective Collaboration: One-location offshore staff members collaborate with real-time communications. It leads to faster problem resolution, idea-sharing, and spontaneous discussions. 

2. Team Activities: In offshore accounting solutions, engaging in team-building activities is much easier when a team works in the same workspace.  

3. Optimal Communication:  Interacting face-to-face is the better way to communicate. If there are any questions, then they can be addressed quickly with proper feedback.

4. More Training Sessions: Team members who work closely can adhere more to training sessions. Whether onboarding new members or providing ongoing professional development, physical proximity facilitates a more interactive and immersive training experience.

5. Social Connect: Social connections are necessary for building relationships among team members. A team sharing the same work area allows for more casual interactions.

Cons

1. Limited Hiring Pool: When the hiring process is restricted to one location only, it limits the diversity of talent in a team. This can affect the adaptability and creative capabilities of accounting firms.

2. Higher Attrition Risk: A one-location offshore team can experience high attrition risk, which can challenge the team's stability and long-term project success. 

3. Bandwagon Effect: One-location offshore staff members can result in a bandwagon effect. This is a drawback, as team members must follow the set narratives, which may impact team dynamics and result in improper project outcomes.

4. Cliquishness: Teamwork at one location can greatly disadvantage groups. This, in turn, hinders team cohesion and can become a massive loss for offshore accounting services as it reduces productivity.

5. Intra-Group Comparisons: Internal comparisons may lead to unhealthy competition among working teams in the same location. This hinders collaboration and impacts morale. 

Pros & Cons of Diversified Offshore Team

Pros

1. Access to Diverse Talent: A diverse team comes up with a broader talent, skills, and expertise. Distributed teams in different locations enable hiring the best people for accounting offshoring. This also works positively in meeting the varied needs of clients and projects.

2. More Room for Innovation & Creativity: Building a team at various locations amplifies creativity and innovation in accounting firms. With diverse perspectives, professionalism, and experiences, the team sparks collaborative problem-solving and flourishes in inventive solutions. 

3. Low Attrition Risk: Choosing a diversified offshore team benefits from low attrition risk. Hiring team members from various locations can mitigate the risk of localized economic challenges, reducing the possibility of mass staff turnover.

4. Better Productivity: A diversified workforce leads to better productivity, workflow efficiency, and task progress. The different working scenarios of different locations help achieve continuous operations and task progress. The team can also manage workload peaks by distributing the tasks among locations. 

5. Improved Client Relationship: A diverse team can better and more effectively connect with a varied client base. This builds a stronger connection and establishes seamless communication, eventually increasing client satisfaction and loyalty.  

Cons

1. Communication Barriers: Communication challenges are the most common issue in diversified teams. Since there are no face-to-face interactions, it can be challenging to coordinate sometimes. However, this can be a minor issue as interaction is relatively easy via Zoom, Skype, Team Calls, and other means today.

2. Cultural Differences: Building a diversified offshore team can be arduous due to cultural differences between people from different regions. Varied cultural backgrounds can also result in misunderstandings, especially when someone prefers to speak their native language. To resolve this, we make English the bridge language between two members residing in different locations.

3. Team Management:  Diversified offshore staff can make managing team members from different locations challenging. Coordinating with them, assigning them to work, and creating a cohesive team culture can be difficult. Nevertheless, effective management strategies can help address these inherent challenges successfully.

4. Training Complexity: The training process becomes more complex in a diversified offshore staff team due to educational backgrounds and varied learning styles. The issue can be resolved if flexible and inclusive training approaches are adopted.

What Do We Recommend?

While opting for offshore staffing, choosing between a One-Location Offshore team and a Diversified Offshore team becomes easy with our recommendations based on the positive and negative aspects of both.

1. Long-Term Planning: Implementing a diversified offshore team optimizes long-term planning. It enhances risk management, problem-solving, and compliance strategies. 

2. Staff Count & Diversification: The team's diversification is advised in offshore staff. Just follow the process: when the staff count reaches 5, diversify into two cities; when it reaches 10-15, expansion to three cities is recommended, and similarly, the operation can progress to four or five cities. This phased expansion allows for a controlled and manageable scaling of operations.

3. Keep Attrition Rates Low: Considering attrition rates in offshore staff is crucial. Significant cities like Ahmedabad, Bangalore, Hyderabad, and Kolkata have 25% and 30% attrition rates, respectively. On the other hand, attrition rates in smaller cities are comparatively low. If diversification is applied, the increased risk of attrition rates can be mitigated.

4. Evolution of Long-Term Strategy: As the firm grows, it is essential to consider the long-term strategy. Understanding how many members might leave the team is a part of it. The long-term strategy must evolve based on the anticipated attrition rates and the expansion plan. Adjustments should be made as the organization grows to ensure a sustainable and resilient offshore team. The strategic choice of a diversified offshore team can last and handle challenges in the firm’s way.

5. Base Location for Larger Teams: When the staff count exceeds 20, it is advised to establish one office as your base location. This centralized hub can be a focal point for the team, and planning occasional gatherings/retreats of offshore teams, where everyone comes together once or twice a year, fosters a cohesive working environment.

Summary

Choosing a diversified team over one-location staff in an accounting firm is optimal. Diversified teams offer various advantages, such as more innovation and creativity, varied talent access, market growth, and a strong team of members with diverse ideas and expertise. They also help improve the workings of offshore accounting solutions.

Frequently Asked Questions 

Q1: How does a diversified offshore accounting team carry out smooth communication?
Ans: Using various communication tools for virtual meetings ensures collaboration and seamless communication between team members working at different locations.

Q2: How can a firm overcome cultural differences with a diversified accounting team? 
Ans: Various interactions between team members via cultural awareness training and team-building activities bridge the gap between members from different locations.

Q3: When choosing between one-location and diversified offshore staff, what should you consider?
Ans: Consider various factors, such as cost-effectiveness, accounting firm goals, availability of talent, innovations, creativity, and client service requirements. 

Entigrity™ is a trusted offshore staffing partner for 725+ accountants, CPAs, and tax firms across the US and Canada. With a flexible and transparent hiring model, the company empowers firms of all sizes to acquire skilled accounting, bookkeeping, and tax preparation staff. As a firm 'run by accountants, for the accountants,' Entigrity ensures precise alignment with the hiring needs of accounting firms, providing staff under your control and management, minimizing concerns about compliance, payroll taxes, overheads, or benefits. Entigrity is a proud independent member of the BDO Alliance USA. We have collaborated with IMA to train and upskill 5,000 Professionals in India. We were also recognized as one of the "Dream Companies to Work For" and won the "Great Place to Work® Certified™" in the accounting offshoring industry. 

Jacob Scott, CPA

Member, Advisory Board

Jacob Scott is a CPA with over 20 years of experience in the area of accounting & finance and has worked as a Senior Audit Associate at EY. Jacob drives the financial planning of the company by analyzing its performance and risks. He retains constant awareness of the company’s financial position and acts to prevent problems. He also sets up and oversees the company’s finance IT system as well as sets targets for and supervise all accounting and finance personnel (management accountants, internal auditors, etc.) Besides overseeing all audit and internal control operations, Jacob develops the corporate fundraising strategy and manage relationships with partners and investors. His roles also include preparing timely and detailed reports on financial performance on a quarterly and annual basis and conducting analysis to make forecasts and report to upper executives. He ensures adherence to financial laws and guidelines.  He has a keen interest in activities and societies, industry tours, educational seminars, cultural activities, sports, and most importantly attending conferences.