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An image taken from the special report on outsourcing

Outsourcing for increased capacity


Outsourcing is no longer a dirty word. It is seeing huge growth across all sectors because it can help solve staff shortages, give flexibility for peak periods and allows for growth.

15th Aug 2023
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One of the great lessons learned during the Covid pandemic was that accountants and many other knowledge workers could work remotely. To go a step further, once staff are working away from the office, is there any difference whether they are three miles or 3,000 miles away?

According to AdvanceTrack founder and veteran outsourcing provider Vipul Sheth, the guiding principles are the same. The technology that made it possible for practices to survive during Covid lockdowns is now feeding a boom in outsourced accounting and offshoring that is helping firms grow and thrive during a time of acute skills shortages.

Accounting workloads have increased post-Covid. Many firms are reaping record revenues, but are struggling to keep up with demand. “Accountants are almost scared to go and see clients because they know they’ll come away with work they can’t service because they don’t have internal staff to cope,” said Sheth.

A large number of experienced accountants have left the profession since 2021/22, adding to a skills vacuum that was already growing before the pandemic struck. Regional and local firms are losing talent to larger firms that can lure people away with the promise of higher salaries. 

IRIS, too, has seen outsourcing increase over the past year or so. “Not just short-term contracts to get them over tax returns, but taking on longer contracts, because it’s going to be much longer term,” said IRIS head of insight Steve Cox, who has been studying the profession’s demographic trends.

“Mid-tier firms have been shrinking during this period and a lot of skilled people have walked out and set up on their own. They’re increasing the talent crisis for mid-size firms because they’re competing for the same people too.”

These factors are all feeding into the talent crisis that firms are experiencing. The outsourcing option that used to be denigrated among accountants has taken on new life as a positive route that can help firms achieve the growth they want.

Unlock growth potential 

“People and skills are key to unlocking organisational growth… [but] accountants operate in a very constrained talent market,” commented Sam Edwards from PwC’s Strategy& consultancy last autumn. “Everyone talks about how difficult it is to keep the talent you have. If you could just turn the talent taps on, there’s so much work out there you could be doing… No one has got the time [or people] to do the work.” 

Job-based outsourced services driven by technology are making it possible for firms to turn on those resource taps to scale up more quickly. Cloud accounting and the app ecosystem within that online environment has made this transition possible. On their own, Xero and QuickBooks Online merely replaced desktop accounting products, explained Sheth. 

“What you’ve now got is invoice capture, invoice chasing and a multitude of different products that make the outputs from cloud accounting much more meaningful. By capturing transaction data at source you’re able to process it more accurately and on a real-time basis. That plays really well to outsourcing,” he said.

Better use of staff

With recruitment clearly topping the list of practitioner headaches, outsourcing offers a way to increase their capacity. Firms that need help now can get access to the people who can help them cope with growth and rising demand, without going through the heartache and frustrations of the recruitment process. 

Outsourcing, or offshoring, where an intermediary effectively takes on accounting staff for its customers, allows firms to defer employment decisions until they have a clearer idea of their long-term workload requirements. And in most instances, the outsourcing partner can usually flex their service to adjust to the client’s evolving resource requirements. 

From the practice’s point of view, tapping into external talent lets them make better use of their existing team members. While the external accountants concentrate on the more predictable back-office accounts prep and compliance work, your local team members should have more time to spend on higher-value work with clients and developing new business.

Eriona Bajrakurtaj from Major’s Accounts explained how she had turned to outsourcing after the pandemic with this advisory model in mind. While some of her team did initially feel threatened and resist the change, those who made the transition to the new-style roles enjoyed being able to spend more time interpreting the numbers and working directly with clients. “They’re loving it,” she said. 

Marketing consultant Kaz Driver (a veteran of the industry with QX Global) explained that outsourcing doesn’t have to be viewed as an emergency safety button that can be activated if practitioners are struggling to cope. It actually gives accountants a chance to overhaul how they operate. For example, she said: “A lot of practices don’t do bookkeeping – but you can offer that service and outsource it.”


Take a long-term, holistic view

Many of the lessons learned from outsourcing have grown out of the experiences of larger practices that pioneered accounting outsourcing and offshoring over the past two decades. 

“They tend to be more rigorous about standardised processes, so outsourcing works really well for them and we are able to scale with them,” explained Sheth. 

The latest wave of growth is coming from smaller firms who are beginning to appreciate how outsourcing can help them expand in the face of recruitment blocks. Taking that step requires them to get their own processes in order, but to really get value out of outsourcing, he advises taking a more rounded approach.

“All any business can do is look at a two to three year horizon and set reasonable expectations that they might get close to,” he said. “So use the opportunity to think holistically about all the issues – where you are as a firm now and where you want to be.

This article is an extract from our new editorial special report:“Alternative guide to solving your skills crunch”. Download it here to discover practical strategies and real-life examples for recruitment, retention and using outsourcing and automation as alternative solutions.

This article was written by John Stokdyk before his tragic passing in June. Read AccountingWEB's tribute to John and share your memories

Replies (3)

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By exceljockey
15th Aug 2023 15:36

How much do involve the client in the outsourcing process? Every time I talk to clients about outsourcing they're always reluctant and are happier to pay higher fees to have work done in-house. I don't have a huge client base but they seem pretty adamant that work is not to be outsourced and certainly not offshored.

I'd love to take advantage of the cost and flexibility of outsourcing and offshoring. I'd love to know how others do it.

Thanks (0)
By Hugo Fair
15th Aug 2023 22:15

Irrespective of several good (if somewhat obvious) points in the article, *please* can we have a moratorium on any variation of:
"While the external accountants concentrate on the more predictable back-office accounts prep and compliance work, your local team members should have more time to spend on *higher-value work* with clients."

This vacuous concept has been trotted out (with only minor wording variations) by anyone selling ANY service in the last 40+ years!
It's nicely vague (so there's no comeback for selling a lie) and it appeals to the inherent vanity of those with power (who want more of that) ... but in itself it is meaningless.

In those rare cases where the boss, or whoever, has (a) identified a specific growth opportunity and (b) identified the specific resource constraints that mitigate against the opportunity ... then it may well be that the service being sold (in this case 'outsourcing') will resolve b and enable a.
But this doesn't mean that outsourcing will generally 'lead to' more strategic or higher margin work ... just that it can be selected as the most appropriate fit for the needs of a specific plan.

So please can we cease and desist with the trope that removing/automating something that you don't enjoy (but may well be the bread and butter of your business) WILL somehow/magically transform into a utopia of importance and more profit.
[The performance of your investment may go up or down - take professional advice first!]

Thanks (4)
Replying to Hugo Fair:
By ireallyshouldknowthisbut
18th Aug 2023 07:19

I have always been of the opinion that outsourcing your core competency will swiftly lead to a deskilling of that core competency within the organisation. Which in turn will undermines your entire business, if you are not competent in your core competency. Government departments have done it for years, but not being subject to market conditions can't go then pay hugely over the odds for bad outsourcing. Such as the most digitally advanced tax system in the world (no sniggering at the back) unable to make basic changes to its software in-house, as it sacked all its staff. It therefore pays years worth of salary for basic forms to be digitised which probably take a few days of coding, and large projects with mamoth budgets being dead in the water. The only type of firm for whom outsourcing makes sense to me is the advertising model ones with huge churn who just 'process' the accounting data not caring about the content. If its full on garbage in/ garbage out, prepared by low skill people, why not outsource it via a fixer co to whoever random to spew out low quality content. Your core competency is not accounting, but sales and marketing and gouging leavers.

Thanks (0)