Why Outsourced Accounting Services are Critical to Your Firm’s Success

Outsourcing has become a common practice in the business world, and one area where it has been increasingly adopted is in accounting. Outsourced accounting services involve hiring accounting professionals from outside the company to handle accounting functions, including bookkeeping, payroll, and tax preparation. While some companies may be hesitant to outsource accounting functions offshore, there are several reasons why it makes sense to do so. In this post, we will explore some of the benefits of offshore outsourced accounting positions.

Cost Savings

One of the most significant advantages of outsourced accounting services from offshore services providers is cost savings. By outsourcing, companies can save a considerable amount of money on salaries, benefits, and overhead costs. The cost of living in countries where outsourcing is prevalent is much lower than in developed countries like the United States, Canada, or the UK, which means that outsourced labor is generally much cheaper.

For instance, the average salary for a staff accountant in the United States is typically above $60,000 per year, not including benefits. In contrast, an accountant with similar qualifications in Mexico, India, the Philippines, or other offshore destinations can be typically hired for a fraction of the cost. This is because the cost of living in these countries is much lower than in the United States or other developed countries. By reducing labor costs, accounting firms can increase their profit margins and improve their overall financial performance

Access to a Larger Talent Pool

Outsourced accounting services offshore provides access to a larger pool of talented professionals. When a company limits its search for accounting talent to a specific geographic region, it may miss out on some of the best candidates. In contrast, with finance and accounting outsourcing, a company can tap into a global talent pool, which increases the chances of finding the best fit for the role.

Many offshore companies specialize in providing accounting services to businesses in developed countries. These firms have extensive experience in recruiting and training accounting professionals, and they have access to a vast pool of talent. They are, therefore, in a better position to find the most qualified and experienced accounting professionals.

According to the 2023 State of Accounting Firms Trend Report, nearly 35% of accountants said that finding the right talent is one of the top 3 challenges for their firm, which is a drastic increase over 21% from the previous year. Also, the National Student Clearinghouse Research Center reports that enrollment for accounting undergraduate students has now fallen 9.4% in two years, or nearly 1.4 million students since the COVID-19 pandemic started. Less students graduating with accounting degrees in the United States also makes a strong case for outsourced accounting services.

Improved Efficiency, Productivity and Scalability

Finance and accounting outsourcing can also lead to improved efficiency and productivity. By delegating accounting functions to an external service provider, companies can free up their internal resources to focus on core business activities. Many business owners have found this critical to their firm’s success and can lead to increased productivity and efficiency in the long run.

Moreover, offshore service providers are generally known for their efficiency and quick turnaround times. They understand the importance of their team members meeting deadlines and delivering quality work. Therefore, they are likely to complete accounting tasks more quickly and accurately than an internal team that may have to juggle multiple responsibilities. Additionally, by having teams in different parts of the world, accounting firms can ensure that their clients receive timely and efficient service from different time zones, leading to increased customer satisfaction and loyalty.

Finally, outsourced accounting services can also provide accounting firms with greater scalability. By having access to a large pool of talented professionals, accounting firms can quickly scale up as per their needs. This can be particularly useful during peak seasons or when the firm takes on new clients, allowing them to quickly adjust their staffing levels to meet the demand.

Access to Advanced Technology

Outsourced accounting services firms invest heavily in technology to ensure your systems and data is safe. This means that companies that offshore finance and accounting outsourcing can benefit from the latest security protocols giving your firm peace of mind. Accounting firms should look for a provider that has remote, on-site and advanced IT support for their team members.

Other Accounting Firms are Leveraging Offshore Accounting Talent

Many firms are finding it difficult to compete with other firms who can more quickly and easily bring on new talent in the way that those who leverage outsourced accounting services do. In the same 2023 State of Accounting Firms Trend Report, some firm leaders say that they are actually firing clients instead of hiring new staff because the US-based talent pool doesn’t have the skill sets they need, or the talent pool just isn’t there. Successful accounting firms understand the benefits detailed in this article, and have embraced finance and accounting outsourcing. Those firms that can’t efficiently scale, find the right talent, and reduce their costs are at risk of being left behind. Alternatively, offshoring accounting positions can be a cost-effective strategy for accounting firms to increase their profits.

Conclusion

While some companies may be hesitant to outsource accounting functions offshore, the benefits far outweigh the risks. However, it's crucial to choose a reliable and experienced offshore outsourcing service provider. Companies should conduct thorough research and due diligence to ensure they select the right partner for their business needs. With the right outsourcing partner, businesses can reap the benefits of outsourcing accounting services offshore and focus on growing their core business activities. Please contact Cadencia today to learn how we can support you with your own offshore team members, or visit the About Us page on our website.