Technology has made it easier, much more accessible, to successfully use offshoring as part of your accounting or bookkeeping business model.
Offshoring is the practice of redistributing activities to another geographic economy to gain an advantage. Trends such as globalization, cloud computing, technological advancements, increased customer expectations, skills shortages, and the increased costs of local labor have resulted in offshoring becoming more common practice across many industries
Although it is generally thought that offshoring is the pursuit of improved margins, often through a lower cost of labor, this isn’t always the case. It could be to gain access to certain resources (De Beers diamond supply, South Africa), workforce skill sets in better supply (India’s IT boom), superior infrastructure (high-speed internet), time zone advantages (to operate 24/7) and so on.
The ultimate aim is to be able to improve a product or service by leveraging one or more of these sustainable advantages. If a firm is able to do this and improve margins, then the offshore venture can be used as a key driver for long term growth.
Why does offshoring work?
Relocating services or production to a country where there are large pools of affordable and highly skilled labor means a product can be produced at better margins and improved quality. Offshoring has been used by major suppliers for years, making items like TVs or phones, car parts, or clothing often at a higher quality and lower price than what could be produced locally.
You can offshore more than physical goods
Specialized offshoring firms can offer customized services. IT services, call centers, accounting services, and customer support are all functions that can leverage global connectivity and cloud-based platforms to seamlessly provide a service in collaboration with an offshore supplier. Using VOIP phones that require an internet connection rather than traditional phone lines mean that communication is significantly cheaper and be connected to CRM systems, such as Practice Ignition, Xero Practice Manager or Karbon, for superior business intelligence.
Offshoring allows you to still retain control
Offshoring has the distinction of still retaining control of the business, unlike outsourcing. The processes, inputs, and development of staff are all still managed by the core business. This allows any precise time deadlines to be managed better, or quality control to be easier to navigate. It also means you can create your own culture with an offshore team that aligns with your company vision and values.
The employees offshore are qualified, vetted, and experienced. They often have exactly the same qualifications (or higher) as required in your own country, but just happen to be located offshore, making offshoring a viable business tool to increase profit and manage opportunities with the extra work capacity and flexibility. The realization is that offshore teams have become so advanced that their teams would be treated no differently to another office in your existing country.
Offshoring for accounting firms
A classic example of offshoring in a specific industry is accounting and the Philippines. In the Philippines accounting is one of the highest volume qualifications. With the increased competition this brings they are able to supply a very high level of qualified graduates entering into the industry. As it is a developing, an accounting firm in the United States or Australia is able to build an offshore team with a provider at a quarter/third of the cost and invest back into the training and development of those team members. As a bilingual nation, they also have outstanding English skills and a very proud working culture.
This is truly a win-win where the local accounting firm can build a distributed workforce, gain capacity and grow. For the Philippine teams, this means they have the opportunity to work for a global accounting firm, work as part of a larger accounting fraternity, grow in skills and remuneration and also be in a better position to support their families.
See how offshoring compares to outsourcing and check out the complete guide to outsourcing for your accounting practice. or get in touch with our consultants to discover how outsourcing can improve your practice.