Six Considerations Before Considering
Outsourcing Finance and Accounting

With the finance and accounting talent crunch still at its apex, more companies and CPA firms are seeking alternative staffing models. According to data from Clutch, 21% of small businesses planned to hire a nearshore outsourcing provider with outsourced functions and processes last year. In the U.S., approximately 300,000 jobs are outsourced each year.
In previous years, the move to outsource talent to a foreign country was primarily to reduce operating costs. In today’s labor market, the increase in offshoring is due to the paucity of experienced talent, or in some cases, talent who wants to actually work. Large companies and the Big Four CPA firms have used offshore talent for decades and have established their own BPO (Business Process Outsourcing) centers in low-cost countries such as India, the Philippines, or South Africa. Because of the scale of these operations, large organizations invest in infrastructure, training, development, and local compliance (did you know that employees in the Philippines receive a mandatory 13th month of compensation?)
Smaller organizations considering hiring offshore resources should consider their own operations and culture before embarking on their own overseas adventure.

1. Process is King. The most important factor in the success of offshoring finance and accounting functions is having repeatable, consistent processes and procedures for work intake, flow, and review. It still surprises me how many mid to large size companies and even typical pedantic CPA firms lack those disciplines. Hiring offshore resources is not too different than hiring someone in your own office, or a domestic remote resource—there must be specific responsibilities and timelines for each aspect of the function. Lacking process results in missed deadlines, rework, and frustrations on both sides of whatever ocean separates the company and the offshore resources. Does your organization have written workflows and reporting structures? Are they applied consistently, or in CPA firms, for example, do partners in the same department do things their own ways? This is part of a larger conversation in some organizations and is imperative to the success of offshoring.
2. Hire offshore for the talent, and not just to save money. This is not to suggest that there is not savings to be had from offshoring finance and accounting functions, although the arbitrage between US and offshore labor costs has shrunk especially in the past three years. In India, for example, average wages have increased nearly 10% per year for the past three years. In today’s global, connected world, many still in the US still find it surprising about the quality of higher education in countries around the world. Countries such as my own South Africa, for example, produce thousands of our equivalent to CPA designation, Chartered Accountants, per year. And in many other countries like mine, these first-generation college graduates and professionals are eager, engaged and want to build careers. Based on numerous conversations with CFOs or partners of CPA firms recently, finding US based talent with the same drive and willingness to work has been a challenge.
3. Treat your offshore teams as peers and not peons. The most successful offshore arrangements are those in which the non-US teams are treated with respect. These professionals are people with families, ambitions, and curiosity, and organizations who hire these resources will optimize their return by treating them as such, getting to know them as individuals and not merely cogs in a global wheel. This is no different than cultivating your own talent in-house, and the organizations who successfully offshore finance and accounting functions have learned this along the way.
4. Start slowly, learn, and expand offshore resources. As with any new venture, there is a learning curve to offshoring. We typically recommend starting slowly with teams of 3 to 5 offshore professionals and building from there. Things will inevitably not go precisely as planned (just as client work for CPA firms), frequent process check in meetings, regular status meetings and reporting on workflow and productivity (not hours), and coaching/tweaking during the first three months of a new offshore relationship is vital. It’s important to initiate the process during the least busy time of the year to allow time for kinks to be straightened and teams to grow acclimated. I’m writing this in the first week of September, so right after the September 15 tax deadline is an ideal time to begin the offshoring process to be ready for year end close or busy season 2024.
5. Time, time, time is on your side. Yes, it is. The time difference between the US and offshoring countries can be a boon and not an impediment. In establishing the working time parameters between the US and offshore resources, it is vital to provide overlap in working hours to facilitate communications—and live is far better than email, as getting lost in translation happens frequently in email, even between two native speakers. While some might think that offshore resources with a 12-hour time difference to the US (India, Vietnam, The Philippines) is advantageous, that scheme makes overlap to US working hours more difficult. And some of my colleagues in India and the Philippines providing offshore resources will attest, the best and the brightest in their countries no longer must work the graveyard shifts to accommodate US work hours, and as a result the B or even C players are those serving US organizations.
6. The right culture and world view. As I mentioned above, the hiring organization’s culture and ability to engage offshore resources as peers is important. This is part of a “world view” that frankly, many organizations have not yet developed. I’ve found that cities such as Miami or Houston, with diverse populations and a thriving global business economies, tend to be more amenable to using offshore resources. Others will likely come along to offshoring but will be late adopters and will continue to struggle with finding the right talent in today’s war for finance and accounting talent.

We have created an omnibus worksheet for organizations considering offshoring their tax, bookkeeping and finance functions. Please contact me at the email below, and I’d be pleased to share it with you.