Outsourcing trend shores up at Accountex 2018
Accountex this year saw a number of outsourcing firms looking to use Making Tax Digital as a launch pad. But for practitioners, outsourcing solves a handful of other practice pain points.
At Accountex this year a number of outsourcing firms returned from their trade show hibernation. In fact, if you glanced over the Accountex programme you’d find that eight outsourcing firms attended the event this year.
Nestled among the usual cloud vendors, the conversations on the outsourcers’ stands didn’t differ too much from the MTD-talk that reverberated around the ExCel centre.
It’s that shift towards digital records and the quarterly reporting that lured Kenny Kshitij Jain, the head of UK operations at Mindspace outsourcing, back after a year break because “every accountant now has a lot of back-office work that they need to do”.
The need for accountants to build out their services to support MTD also explained digital outsourcer Advance Track’s first time at Accountex in five years. Advance Track’s MD Vipul Sheth told AccountingWEB that he believes outsourcing would be needed to relieve practitioners from “working at the coalface”
Now while automation and regular bookkeeping go some way in preparing for this, as Global Infosys’ CEO Arun Ravindranthan argued, firms will still need someone in the back-office.
"That is going to have an impact on the deliverables when a lot of firms of accountants don't want to do physical processing anymore," he said. "They want to do more advisory services. Someone has to do the donkey work."
Access to talent
Those are some of the reasons why the practitioners AccountingWEB spoke with at Accountex have seized outsourcing. As Paul Miller from Cornish Accounting Solutions put it, outsourcing solves “where you focus your resources”.
Echoing this point, AccountingWEB regular Glenn Martin, who was contacted by six outsourcing companies before the event, told AccountingWEB that his interest in outsourcing was piqued by “the endless resources [it provides] without having to recruit”.
More than the MTD opportunity that enticed the outsourcers back to the trade show, it’s the access to talent that is an attraction to small practitioners. “The need for outsourcing is increasing because it's the only way they can replace the lack of staffing in their offices,” said Global Infosys’ Ravindranthan.
The recruitment crunch has become one of the biggest pain points for practitioners. As Mark Telford, the director at Telfords Chartered Accountants noted: “I've got a set up where I can do with a qualified accountant who if they came to work with me, some days they'd be in the office on their own, other days there might be two other people in. Now they are going to get bored senseless if they've worked in a bigger practice.”
The need for outsourcing is increasing because it's the only way they can replace the lack of staffing in their offices
So rather than hire someone to take care of this non-client facing commoditised work, outsourcing has enabled practitioners like Cornish Accounting Solution’s Miller to have the UK team “client-focussed” and to have a “qualified person offshore for half the price than we can in the UK”.
For Glenn Martin, this route has saved £1,000 a month, and for that, he says, you get a full-time chartered accountant.
As the doors open at Accountex 2018, the delegates pile into the ExCel centre exhibition hall.
Enables practice growth ambitions
Telford had organically grown as a sole practitioner. Simply through doing a good job and picking up client referrals he found himself in a position where he wanted to attract more quality clients. But he hit a quandary: in order to do that, he had to free up some time.
The only way he could really continue along this practice growth trajectory was to offload the back-office work. His decision to outsource accounts production and payroll has freed up 20 hours a week.
“That’s 20 hours a week which I can then use to improve the practice: the old traditional work on your practice, rather than in it,” said Telford. “I'm in a position where I am able to do that now.”
With MTD for individuals not set in stone and the GDPR noise sure to quiet, Glenn Martin viewed this year’s Accountex as the “window of opportunity” for practice growth. As he gets booked four to five weeks ahead, outsourcing has allowed him to do things quickly.
That’s 20 hours a week [freed through outsourcing] which I can then use to improve the practice: the old traditional work on your practice, rather than in it
“If something comes in or if I need this urgently, I was struggling to do it without putting somebody off,” he said. “But with outsourcing you can scan the work to them, saying it's a major job, and you can get jobs back in two-three days. A traditional practice wouldn't be able to do that.”
By speeding up the turnaround time on accounts and tax returns Telford is now in a position where he can have “current conversations” with clients. “We are talking about very recent information, relevant, and it's not the traditional talk about past events, we're talking about current information and that can only add value to the service you provide.”
For Cornish Acounting’s Miller outsourcing not only reduced the fixed overheads but growth-wise, it also taught the firm the benefits of systemising. “Outsourcing by the very fact you're sending things offshore means you'll have to have a process because they don't necessarily see all the records or talk to the client,” he said.
Although some are reaping benefits, outsourcing still carries some stigma within the profession. The idea of offshoring work to India or the Philippines doesn’t sit well; that lack of control as sensitive information and work is out of sight. But as Global Infosys’ Ravindranthan pushed back: “In today's age, does it really matter where the person is physically sitting?”
Manila in the Philippines is a popular base for outsourcing.
This feeling is being recognised across the business world. According to Stefan Vermeulan from D&V Philippines outsourcing, “What we see is more and more people are doing it and getting more familiar. That's a big difference because clients, CFOs or companies are doing it themselves.”
Clear transparency is what Global Infosys’ Ravindranthan pegs as one reason why outsourcing is being used by the top 100 firms. “It's not like they're sending a job to an unknown. They have visibility of the work being done on the server.”
Communication is by far and away is the most important thing because gone are the days of the India outsourcing horror stories
And that’s why communication is key to the overall success of outsourcing. Mark Telford has fortnightly zoom calls with the outsourced accounts production and payroll teams. In fact, this factor was more important than price, when he made his final decision.
“Communication is by far and away the most important thing because gone are the days of the India outsourcing horror stories where you never hear anything and the work comes back incomplete.” He added: "The quality of staff and work is head and shoulders above what you would get from a member of staff in this country."