Outsourcing is an economic principle developed by the 19th-century economist David Ricardo.
The basis of this principle is that businesses should outsource the production of low-value services even if they can produce them more efficiently themselves. This is because there is an opportunity cost —for every hour consumed by non-productive tasks, there is some high-value activity you could be dedicated to.
The advancement of cloud technology in the accounting profession has enabled outsourcing services to become more accessible to firms of all sizes.
There are many benefits and reasons to outsource, but some of the most common problems accounting firms face are:
Shortage of Accounting Staff in Australia
Attracting and retaining staff these days can be quite difficult. The loss of a team member at the wrong time of year can have significant effects on productivity or billings.
Setting up a team offshore can solve this problem, as there are significant numbers of qualified CPA and administration staff available, and ready to commence employment with you.
High Wage Cost in Australia
As an employer, you already know the costs of employing staff for your practice is expensive, causing margins to be squeezed, and this isn’t getting better.
A benefit of employing staff with The Outsourced Accountant is you can employ a full-time dedicated employee for between 15,000-18,000 AUD per year.
This low wage cost allows you to employ three staff offshore for the cost of one staff member in Australia or New Zealand. This also allows you to increase your firm’s capacity by 200% for the same cost.
Price Pressures on Accounting Services
With the evolution of cloud technology and offshoring becoming more common practice, compliance services are becoming more commoditised which is putting pressure on prices more than ever. A firm that used to operate in one region can now operate nationally, or even globally.
Your competition is becoming more agile, mobile and cost-effective, which will ultimately allow them to charge lower costs and deliver their services quicker.
If You Don’t, Your Competitors Will
The early adopters in the accounting industry are already doing it, you just may not know it yet. If you don’t embrace these changes and think your clients won’t leave you due to your long-term relationship, you will be in for a rude shock.
When a more agile, cost-effective and quicker to deliver practice swoops in and takes your clients underneath you, it will be too late.
The danger is not only other accounting firms but also bookkeepers, business coaches, financial planners and mortgage brokers who will now have greater access to be able to offer accounting services (and doing it all using offshore accountants)
Outsourcing is more than just cost savings; it is a way to deliver the must-do compliance work cost-effectively and more timely, and allow firms to truly add value in working with clients to grow their businesses.Outsourcing the less value contributing tasks to a lower cost provider enables businesses to capitalise on higher value opportunities.
The Outsourced Accountant supports Australian and New Zealand accounting firms by helping them understand and implement outsourcing solutions to help them become more proactive and truly add value to their clients.
If you want to know more about outsourcing, call us at 1300 896 522 and download our e-book.