What is outsourcing?Outsourcing simply means engaging an external agency, outside of your accounting practice, to perform certain functions across your operations. These could be individual tasks or projects, specific areas of operation, or even services that are outside your own expertise (for example, marketing). For many practices, it’s a smart move. It opens up a world of resource that goes beyond your own team’s capacity or skills. In fact, the use of outsourcing is more common than you likely think, with 68% of businesses outsourcing some aspect of their operations. And as the world gets smaller in terms of ease of transport and communication, outsourcing will continue to be a major part of a successful business model. For some, this means looking overseas—what’s referred to as offshoring—the benefits of which are predominantly to minimize the challenges with wage cost and talent pooling for local accountants while still having access to qualified, professional and highly motivated team members. Offshoring has the distinction of still retaining control of the ongoing workflow.
Why consider outsourcing for your accounting practice?To remain competitive—and relevant—accounting practices must seek out more cost-effective yet profitable ways of delivering to their customers. Here are some reasons for outsourcing to consider:
- Outsourcing is economical It’s generally more cost-effective to engage a provider who is specialized in offering a particular product or service, rather than attempting to offer the solution in-house and face higher wage and overhead costs. It also means you can offer a more attractive price tag for clients while keeping profit in your pocket.
- Outsourcing improves business focus Tasks that an accounting practice chooses to outsource are those that typically take time and resource away from the core business, where often the right tasks are being worked on by the wrong people. By outsourcing, accountants can instead focus on customer relationships and business development – in other words, growth.
- Outsourcing creates a better quality result Outsourcing to professionals ensures you get access to world-class accounting talent with a global knowledge base. They’re focused on offering a niche service without the distractions that often come from also juggling wider business operations. The benefit for the accounting or bookkeeping firm is matching the right level of experience and skill level against the right tasks. Preparation, reviews, and client management can all be split out accordingly.
- Outsourcing supercharges capacity Outsourcing gives you the capacity and freedom to keep your accounting practice agile. It gives you quick access to a skilled workforce, freeing up your internal resources and easing the crunch while reducing customer frustration and keeping you a step ahead of competitors.
- Faster delivery
- Increased profits
- Increased capacity
- Space to focus on core competencies
- Reduced cash outflow
- More predictable costs
- Alignment of tasks
What can you outsource?It’s possible to outsource just about any aspect of your practice if it makes sense from an operational or financial perspective. From core services, to payroll, administrative support, through to IT, accounting or setting up a new bookkeeping or advisory division, outsourcing allows you to operate with the capacity of a larger enterprise, without the costs that may come with a large in-house team.
Common types of outsourcingDepending on the type of work you need support with, there are different approaches to outsourcing that could work for your accounting or bookkeeping business. These include:
- Professional services outsourcing As your business grows, it’s likely you’ll have a need for specialized services for HR or recruitment, data entry or dealing with the legal side of your business. These are all examples of professional services that can be managed with the help of external business support.
- Project style outsourcing Some businesses may choose to outsource work on a project-by-project basis rather than on-going work. This allows you to work through a backlog of work quickly and cost effectively without having to hire a staff, there’s no need to train staff, and you know the work will be completed for a fixed cost.
- Business Process Outsourcing Business process outsourcing involves contracting specific functions that support your business to an external supplier. An example we’re all likely familiar with is a call-center, which is outsourced to a separate provider yet acts on behalf of your business with customers. Or it could be that a company relies on a distributor in order to get its products in front of consumers.
- Dedicated offshoring with a global team A more strategic option is to work with a provider who has local support but offers you dedicated offshore staff. This model provides the best of both worlds where you can focus on workflow and where the offshore provider is the legal employer of the staff. You can engage the provider who then offers local and offshore management and has the specialist skills to take care of all the offshore business. Most importantly, these team members are dedicated to only work for you, so as they grow, so do you.
Is outsourcing right for your accounting practice?While there are benefits to outsourcing for most businesses, it doesn’t mean it’s necessarily right for all. Outsourcing could be a great option for you if:
- You want more time to spend on customer relationships, business development or business growth initiatives
- You find yourself doing mundane or repetitive tasks that don’t bring more money through the door
- You want to grow your firm but don’t have the capacity to take on new clients
- You want to offer faster, improved or more cost-effective services to your clients in order to separate yourself from competitors
- You know that your time is better spent on productive tasks rather than ones that take you away from growing your business.
- You have or are planning to run your business core applications in the cloud.