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Outsourcing round-up: Is it good or bad for UK accountants?
The Great Debate is brought to you in conjunction with accountsIQ, the outsourcer's first choice for intelligent accounting online.This month saw the first Great Debate on AccountingWEB, where our guest speakers argued whether outsourcing was an entirely good thing for British accountants. Here’s what they had to say.
Jim Brown, director of BRAL, was our opening speaker. He kicked off the first round by making the obvious argument that outsourcing saved on cost, but followed up with some interesting observations specific to the profession. Namely that outsourcing should free up managers and partners from time-consuming recruitment, training and compliance duties, leaving more time for client service. Brown also argued that attracting and retaining good staff is becoming more difficult (something that has been reported elsewhere on AccountingWEB), and outsourcing will make this easier. The theory is, trainees who no longer have to work on boring clerical duties, which will now be outsourced, can work instead on interesting value-added services, which will be more profitable for the firm. Lastly, Brown suggested that the time saved by outsourcing will allow firms to branch out into areas other than accountancy, such as IT support or HR consultancy.
Our opening speaker for the opposition was Paul Windsor, managing partner of Windsor Stebbing Marsh. Windsor argued against the line of thinking that saw accountancy as a commodity, as it leads only to low margins and undervalued services. He also expressed his belief that outsourcing jeopardised the “trusted advisor” status accountants strive to achieve. Of course, while outsourcing is chiefly argued for on costs terms, often these savings remain to be seen. Windsor highlighted that prices for IT infrastructure, set-up and error correction could all erode margins. There was the loss of control and opportunity costs to be factored in as well. Those who retain all their accounting functions in-house can give clients a quicker turnaround and a better service, said Windsor, who suggested that outsourcing was at base unprofessional.
Jim Brown was supported by Tony Connolly in our second round, managing director of accountsIQ, as his seconding speaker. Connolly pointed out that the online nature of modern outsourcing has changed the landscape somewhat. Outsourcing now means that information can be processed and accessed quick enough to form useful management dashboards for decision-making, whereas before leaving it until the month-end was often too late for a savvy client to do anything useful with it. Outsourcing can also get accountants away from transaction entry and into the valuable knowledge processing roles where they belong.
The final speaker was Michael McKerlie, chief executive of RAN ONE International. He put paid to a lot of scaremongering that had been going on about outsourcing: that it would cost jobs, that it would commoditise accountancy, and that you needed it to be profitable. In truth, he argued, offshore outsourcing has been getting more expensive and will continue to do so, accountancy is being commoditised anyway, and that there were different types of profitable firms, so not all would benefit from outsourcing. He cited David Maister in saying that firms generally traded off expertise or efficiency, and it was the latter model would benefit from accountancy. He closed by saying that accountants need to be close to their clients in order to make strategic decisions about their firm.
Thank you to Steve Pipe, Mark Lee, Shaun Crozier, Jonathan Vowles, Robert Harper, Susan Mason, Steven Holloway, and Vipul Sheth for participating in the opening rounds.
The debate is now open to the floor. If you want to add to the discussion, there is a fine bottle of Rocca 1997 to be won for the member with the most interesting contribution to make.
Number of comments: 7
AccountingWEB.co.uk 2-Jul-2008
Categories: Practice Features
Times read: 6123
and if so what if they dont
Outsourcing - it is a good exposure in the first place.
I am also happy to announce that my CPA Ireland friend in the UK has no problem being 'accepted' as accountant or auditor in the UK. Not only UK, but also in the EU.
Think about this to those who comes from highly restricted and regulated countries as far as the term 'accountant' is concerned.
There is always benefit mutually to such highly regulated countries to accept recognised qualifications for mutual benefits. As long as you don't signed an MRA with a "double-standard" or "low class" accountancy membership/examinations body, then you are still highly respected and well accepted world-wide.
I recommend that highly regulated countries to look into this aspect deeply and give quick due consideration to the recognition matter so as to make the work of outsourcing and mobility of 'RECOGNISED' accountants easier.
I urge such highly regulated and controlled countries to look into the qualifications of the CPA Ireland (just think about my friend's mobility in UK and EU), AICPA, HKCPA, CA (SA). These are world-class qualifications.
This is also another worthy qualifications for recognition in Malaysia, besides the CPA Ireland and AICPA.
ICAEW recognises CA (SA), so is HKICPA. Oh yes, HKICPA should also be recognised in Malaysia.
This mutual recognition would paved the way for outsourcing accountants to be made easier.
Outsourcing is good and bad.
In Malaysia, we all know that some of the most prestigious international CPA qualifications are not recognised. For instance, the AICPA, CPA Ireland, are not recognised under the protected term 'accountant'.
But we all know that CPA Ireland and AICPA are highly recognised overseas. Their quality standard is none other than the Malaysian recognised Chartered Accountant of the Englands and Wales.
You can save cost, but the work can be done by those "unrecognised" accountants, and will this be acceptable or criticised?
To resolve this issue of recognition with a view on acceptability of outsourcing accountants, I honestly think that countries Mutually Recognised each other's IFAC member qualifications. For instance, what is wrong with the MIA recognising CPA Ireland and vice versa? Same goes for MIA and AICPA.
Perhaps, the local variants need to be taken into consideration here. Those who wish to practice, must write the local variants, whilst those who either migrated or opt for another overseas professional qualifications such as AICPA or CPA Ireland should be given the chance to be called 'accountant' under the overseas countries regulations.
What is wrong with such mutual recognition? We aren't recognising rubbish qualifications that comes from degree mills. We are talking about professionalism here and each step is taken into account carefully in this way and also this is an acceptable approach.
Rather than outsourcing overseas,at this particular moment we should be thinking more about supporting our local economies & skills.
The partners of firms have to decide what are they really offering to their clients? If the offering is about compiling business information to comply with regulatory requirements, outsourcing may not be the choice for these firms.
However, if the value proposition offered is to provide business assurance as well as providing ideas to the entrepreneurs on how to be successful in the future, outsourcing would relief the firms from the compilation work and allows the partners to spend more time with the clients on strategic issues.
Outsourcing would also create new risks such as the lost of the "touch" at the working level. This is why the choice of the outsourcing partner would be important.
Whether to outsource or not would be something that has to be taken seriously and should be part of the bigger picture of making the accounting practice more relevant to the clients in the way the feel most valueable.
The entire accountancy function should be outsourced, preferably to practitioners in America and India.
The big beneift is cost. However, just as importantly, unlike many UK based accountants, overseas practitioners feel no obligation to act primarily on behalf of HMRC. Indeed many win clients by emphasising their ability to minimise UK tax using legal methods.
Speaking to overseas accountants is such a refreshing exercise. They're quite clearly on your side. At a time of severe recession, this is precisely what we need.
Too many UK accountants have had a culture of developing cosy relationships with HMRC to make things easier for themselves. Others have a bizarre sense of morality where they actively want clients to pay as much tax as possible, because that's what feel is the right thing to do. However, that's not their job.
The mesage is clear: focus more on saving your clients money or lose out.
Doubtless this posting will attract the usual share of whingers, trotting out an array of weak arguments for maintaiing the status quo. However, there will be others - hopefully many others - who will have seen this trend for themsleves, and now recognise it as an terrific opportunity to seize business from the laggards.
