Strategic Benefits of Geodiversity in Accounting Offshoring

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Table of Contents

Picture this: a decade ago, the idea of outsourcing and offshoring in the accounting industry was greeted with doubt and uncertainty. Fast forward to today, it has become as routine as balancing a ledger.

But here's the thing: even while the initial problems of finding the right partners may have been overcome, a whole new set of challenges awaits those of us navigating this ever-changing landscape.

Understanding Talent Retention, Talent Cost, and Talent Availability

1. Talent Retention

Talent retention refers to an organization’s ability to keep its workforce engaged, motivated, and committed over the long term. Retention strategies involve providing growth opportunities, fostering a positive work culture, and addressing employee needs effectively. In the context of offshoring, retention is critical to avoid high turnover rates and ensure the stability of global teams.

2. Talent Cost

Talent cost includes the total expenditure associated with hiring, compensating, and retaining employees. This encompasses salaries, benefits, training, and infrastructure costs. Effective cost management in offshoring can lead to significant savings without compromising on quality.

3. Talent Availability

Talent availability refers to the access and supply of skilled professionals in a particular region. Factors such as educational institutions, industry presence, and workforce size influence availability. Geodiversity plays a crucial role in accessing untapped talent pools in Tier 2, Tier 3, and Tier 4 cities. Schedule A Call

The Next Challenge: Talent Retention, Cost, and Availability

Now, imagine you've cleared the initial hurdles of offshoring and outsourcing in your accounting firm. The next challenge? Holding onto your top talent, managing costs effectively, and ensuring an uninterrupted supply of skilled professionals.

It all comes down to maintaining team engagement, offering competitive compensation, and accessing a steady pipeline of qualified professionals. Without a solid long-term strategy that addresses these aspects holistically, your efforts could fall short of achieving sustainable success and growth.

When your team grows and your workflow surpasses the 10 or 20 mark, having all operations concentrated in one location presents risks. Market changes, operational disruptions, and competitive pressures can severely impact productivity and scalability. Diversification isn’t just a strategic choice; it’s a necessity.

Classification of Cities: Metro, Tier 1, and Tier 2, 3, 4 Cities

To understand the dynamics better, let’s classify cities into three categories:

Metro Cities: New York, California, Chicago, and similar high-density urban centers.
Tier 1 Cities: Austin, Nashville, Raleigh, Ahmedabad, and cities with rapidly growing economies.
Tier 2, 3, and 4 Cities: Smaller cities and towns with emerging opportunities, lower costs, and untapped talent pools.

Comparing Cities: Talent Cost, Retention, and Availability

Metro Cities

Talent Cost: Highest, ranging from 1.5 to 2 times compared to smaller cities.
Talent Retention: Challenging due to frequent job changes and competitive offers.
Talent Availability: Extensive pool but highly competitive to secure top talent.

Tier 1 Cities

Talent Cost: Moderate, ranging from 1.25 to 1.5 times compared to Tier 2, 3, and 4 cities.
Talent Retention: Easier than in metro cities due to less transient workforce.
Talent Availability: Expanding pools supported by regional investments.

Tier 2, 3, and 4 Cities

Talent Cost: Most economical, serving as a baseline (1x).
Talent Retention: High due to fewer competing opportunities and increased loyalty.
Talent Availability: Smaller but rapidly growing talent pools.

Strategic Expansion and Geodiversity

How do we address these challenges? Our value proposition revolves around geodiversity. By strategically spreading our offices across 2 countries and 18 cities, we’ve mitigated risks associated with market changes and operational disruptions.

Our deliberate expansion plans over the next five to eight years include establishing a presence in two additional countries and expanding to 30 cities worldwide. This strategy ensures long-term sustainability and a competitive edge.

Why Building Teams in Tier 2, 3, and 4 Cities Matters

Diversifying into Tier 2, 3, and 4 cities is not just a cost-effective strategy; it’s about building resilience. For example, one client built a robust team of 60 individuals spread across five cities. Their strength wasn’t restricted to a single area; it was distributed to leverage the unique talent and resources each city offered.

This approach isn’t merely about reducing costs but about achieving balance. By diversifying your workforce across multiple cities, you reduce the risk of attrition and foster stability within your organization.

Shaping Market Dynamics: Proactive Competition

As these markets continue to develop, competition is inevitable. Still, our approach is not just to stay ahead of the curve but to shape it. By proactively expanding into emerging markets, we ensure that our teams are not only geographically diverse but also future-proof.

Conclusion: Leading Change Through Geodiversity

The evolution of offshoring and outsourcing in accounting demands more than band-aid solutions. By valuing geodiversity and addressing talent cost, retention, and availability, we’re setting the stage for sustained growth and success. Diversifying into Tier 2, 3, and 4 cities isn’t just a strategy—it’s the way forward.

Happy reading!

CA Nemin Vora

Nemin Vora is a Chartered Accountant (equivalent to US CPA) and Tax Attorney, serving as the Offshore Success Advisor at Entigrity Solutions LLC. With over 7 years of experience working with Big 4s and public accounting firms across North America, he's the person you want to talk to when you're thinking about taking your accounting firm global. Nemin is a seasoned leader and a dynamic content creator, weaving stories and insights on tax, leadership, and life that resonate with a wide audience. This creative outlet not only showcases his depth of knowledge but also his ability to connect and inspire. He consults and speaks on various topics including Building Remote Teams, Remote Working, Offshore Staffing, Strategic Planning, Scalability of Accounting Practice, Cloud Accounting, Practice Management, and AI in Accounting. Outside of work, Nemin is a learner at heart, an actor on the stage, and a tech enthusiast.