HOW TO IDENTIFY THE RIGHT OUTSOURCING PARTNER

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Table of Contents

Offshoring isn't a modern phenomenon. It has been a well-established practice in tech, manufacturing, and engineering for three decades. Yet, it was often seen as taboo in the accounting industry until the pandemic. The onset of COVID-19 significantly boosted the sector of offshore accounting services, serving as a catalyst to shatter the stigma and tripling the number of accounting firms that outsource their work.

There are several reasons for the rise of offshore accounting and bookkeeping services post-pandemic. Offshore accounting companies offer a variety of services that aid businesses, particularly in the tech sector, in efficiently managing their accounting needs. This includes Staffing Challenges, Tech Adoption, Remote Working Normalcy, and so on.

Choosing the right offshoring partner is one of the most challenging tasks that firms face today. Offshoring is more or less mainstream and culturally accepted within the accounting industry. As a result, you can ask yourself some questions before selecting an “Offshore Staffing Partner”.

Does the chosen partner have some prior experience?
Has your chosen offshore service provider been able to provide your business with high-quality services?
Is your preferred partner technologically advanced?
Does your offshoring Partner have trained professionals?
How to Find and Choose the Best Offshore Accounting Services?

Why Outsource Accounting Services?

Outsourcing accounting services can bring numerous benefits to firms, making it a strategic move for many. One of the primary advantages is cost savings. By outsourcing, firms can significantly reduce labor costs associated with hiring and training in-house staff. Additionally, outsourcing accounting tasks allows firms to tap into a pool of specialized skills that may not be available internally. This includes expertise in areas such as tax preparation, financial analysis, and financial reporting. Moreover, outsourcing can lead to increased efficiency as it frees up internal resources, allowing the firm to focus on core activities and strategic growth. Offshore accounting service providers are equipped to handle complex financial transactions and reporting, ensuring accuracy and compliance with regulatory standards. By outsourcing accounting services, firms can achieve a higher level of financial management and operational efficiency.

If you're looking for the right offshore staffing partner, here are some things to think about. These tips can help you ensure that you find the best offshore partner for your firm.

1. Check management background

Examining the management team’s knowledge and experience is crucial when searching for an accounting offshoring company. It is recommended that you choose a company that has great experience serving the accounting industry as they better understand its complexities and can provide appropriate solutions. An offshore accounting service provider plays a vital role in ensuring seamless customer support and scalability, adapting their services to future accounting needs, and offering trial periods to evaluate their effectiveness and integration with in-house teams.

2. High-Security

Data privacy and security measures are the foremost priority of the accounting industry. Ensure the data security & IT protocols offshore company has implemented to safeguard and avoid the risk of data breach. Investigating an offshoring company's ability to safeguard confidential data is essential. Ensure they have an outlined IT policy, high-level data security compliances, ISO, GDPR, SOC 2 certification, future business continuity strategies, E&O, cybersecurity, insurance policies, etc. If required, you can also insist on having a virtual tour of their office.

3. Right accounting professionals for the long-term

With offshore staff, you can eliminate long recruitment processes and instantly hire the right talent. Accounting firms that have clients with unpredictable growth or hiring seasons are better suited with offshore staffing providers capable of scaling up quickly to meet your varying frequency hiring demands. Your offshore partner should provide you with efficient staff, understand your vision, and stay with you for the long term. Additionally, having an offshore team offers significant advantages in terms of cost efficiency and scalability, enhancing your firm's operations and growth.

4. Work with Specialists – Avoid Generalists

There is no doubt that the offshoring industry is vast, spanning areas such as accounting, IT, engineering, KPOs, and BPOs. Recently, many small CA firms (equivalent to CPA firms) have entered the offshoring space to expand it. However, their generalist approach and lack of specialized focus are drawbacks. So, whenever you are offshoring, remember that your Offshore Partner must be the pulse of industry-specific best practices. Therefore, the rule of thumb is to avoid generalists and work with specialists.

5. Recommended by experts and clients

Reviews and recommendations are the most traditional yet effective way to evaluate your offshore partner's credibility. Before confirming an offshore partner, do your due diligence on various social media platforms to find if other CPAs or industry experts have recommended your offshore staffing partner for their work. Do not forget to check their reviews (video or written) as well.

Effective financial planning and outsourced accounting services can significantly contribute to firm growth by providing strategic insights and efficient management that enhance operational effectiveness.

6. Avoid mom-and-pop shops

Hiring freelancers or from mom-and-pop shops is too familiar in the IT industry. But the scenario is entirely different when it comes to hiring for accounting firms. Accounting services require a high level of confidentiality, accuracy, and compliance with regulatory standards. You just can’t trust anyone when it comes to offshoring accounting tasks. So, try to avoid freelancers or small groups for offshore staffing as you are not sure of their survival. You cannot rely on their commitments and services, resulting in a delay in the clients' deliverables.

7. Do take reference

Contact some of its customers and collect information and testimony about their experience. Before you know about your offshore partner, it is good to know how many others have heard about them and their positive feedback. Good references can always ease decision-making. Do speak with at least one or two of their existing clients to confirm the experience. By doing so, you can make an informed decision based on trustworthiness and credibility.

8. Contractual Commitments

Before starting to work with any offshore staffing partner, it is essential to determine what they cover in their contracts. How well and detailed is their contract? Does it lay down clear responsibilities for the company and its employees? It’s very important to have a detailed look inside the contract and determine if it is reliable to work with them. Ultimately, the agreement must be a legal document and should be binding according to the law.

9. Certification & Accreditation

Before choosing the offshore staffing company to work with, validate all the above points stated with the relevant certification, accreditation, policies, and processes.

Common Mistakes to Avoid When Outsourcing Accounting

When offshoring accounting services, there are several common mistakes that firms should avoid to ensure a successful partnership:

Not Clearly Defining the Scope of Work: Ensure that you clearly define the scope of work and the specific services you require from the offshore accounting partner. This helps in setting clear expectations and avoiding misunderstandings.
Not Conducting Thorough Research: Conduct thorough research on the offshore accounting company, including its reputation, experience, and credentials. Verify their track record and client testimonials to ensure they are reliable and competent.
Not Establishing Clear Communication Channels: Establish clear communication channels to ensure effective and timely communication with the offshore accounting service provider. Regular updates and feedback are crucial for a smooth collaboration.
Not Monitoring Progress: Regularly monitor the progress of the offshore accounting company to ensure they are meeting your expectations and delivering quality work. Set up regular check-ins and performance reviews to stay on top of the project.

By avoiding these common mistakes, firms can ensure a successful offshore accounting experience and fully reap the benefits of outsourcing accounting services.

Jack Owens, CPA - discovered the Real Power of Offshore Staffing

Jack is President of JE Owens & Company and has been in public accounting for 35+ years, based out of Orlando, FL. He had 4 staff members when he started out with MYCPE ONE and was catering to small and mid-sized firms only in central Florida. Today, he has 6 in-house staff members and 4 offshore staff with MYCPE ONE.

Conclusion

It is really crucial to choose the right offshore accounting partner if you want your firm to succeed. Today’s business environment is too fast-paced, and having a reliable partner who understands the nuances of the accounting industry makes a significant difference. From ensuring high-security standards to providing specialized talent, your offshoring partner must meet a variety of criteria to support your firm’s goals effectively. By following the key considerations outlined above—such as checking for certifications, avoiding generalists, and seeking recommendations—you can identify a trustworthy and experienced offshoring provider.

Moreover, firms must ensure that their chosen partner offers the right talent for long-term success, implements strong data security measures, and provides contractual commitments that align with legal standards. Offshore staffing is not just about cost savings; it’s about building a scalable, efficient, and secure operation that can enhance your firm's ability to serve clients better.

With proper due diligence and a focus on the long term, firms can leverage offshore accounting services to grow their firm, improve efficiency, and access specialized skills while ensuring they meet the highest standards of compliance and security.

FAQ's

Yes, it is pretty safe to outsource your firm's accounting tasks. But as we know, risks are everywhere. It’s just up to you how you take pre-steps or measures to tackle them. Always look at their security measures and certificates when choosing an outsourcing partner. Make sure that they are not involved in any data breaches during the total year of their work.

Most quote that hiring during the tax season is crucial, and some say that hiring beyond the tax season seems to be beneficial. There are different perspectives on these. You can explore the blogs below to get detailed information on this.

Shawn Parikh

Co-Founder & CEO

Shawn Parikh is the CEO and Co-Founder of MYCPE ONE. A Chartered Accountant by qualification, he has over 15 years of experience of being a problem solver for small to mid-size firms and over time he has given consultation to thousands of CPAs, accountants and tax pros. Shawn has always been a big believer and advocate of social enterprises and small accounting firms & businesses. He consults and speaks on several topics ranging from Building Remote Team - Remote Working, Offshore Staffing, strategic planning, Scalability of Accounting Practice, cloud accounting, practice management, LinkedIn marketing, etc.