Outsourcing & offshoring is always an interesting topic to discuss…
And in the UK (compared to Australia for example), the feelings towards it definitely seem to be more against it, than for it.
So, let’s start by looking at what I mean when I say outsourcing & offshoring.
Outsourcing simply means to give a task to somebody outside of your practice. They could still be UK based, but they’re external to your practice.
Offshoring means to move a business process from one country to another e.g. move your bookkeeping department to India.
For the purpose of this article, I’m going to use the terms outsourcing and offshoring interchangeably, specifically referring to the outsourcing of client work e.g. accounts production, tax, bookkeeping, payroll etc.
(It’s worth noting that many other things can be outsourced and are worth outsourcing such as: Marketing, Diary management, Virtual Assistant etc)
The truth is that outsourcing can and does work.
And for the accountancy practices that have mastered how to do this, they are enjoying greater efficiency and profitability, whilst freeing up time for the rest of the team to focus on adding even more value to clients.
So, why don’t more practices use outsourcing?
It could be down to any number of reasons, but what I’ve found over the years is that it usually comes back to one of the following:
- They’re worried what their clients will think
- They don’t think it makes sense financially
- They don’t think it will work/are scared to get it wrong
- They’re worried what their staff will think
I’m going to throw it out there that every single one of these is an irrational fear.
Irrational Fear – “A persistent, abnormal, and irrational fear of a specific thing or situation that compels one to avoid it, despite the awareness and reassurance that it is not dangerous.”
1. “I’m worried what my clients will think”
Of course, there will always be some clients who won’t like the idea of people outside of your organisation dealing with their accounts etc.
The fact is, most clients really couldn’t care providing you follow the steps below.
They’re more likely to leave as a client due to bad service than they are because you outsource part of their work.
Be open and transparent with your clients about:
- Why you’re outsourcing their work
- Where it’s going and to who
- Assure them that the team taking care of it are equally as skilled, and that it allows your in-house team to spend even more time adding value to their lives
- Tell them about how you plan to make sure their data is kept safe & secure and how you will minimise the risk of any breaches
Don’t just bury it away in the terms & conditions in your Letters of Engagement.
2. “I don’t think outsourcing will make sense financially”
Outsourcing isn’t the low-cost alternative that most think it is…
Sure, you can find people for £10 an hour, but if you pay peanuts you’re probably going to end up with monkeys.
You can probably expect to pay around £13,000 for a full-time bookkeeper, and £18,000 for a full-time accountant.
There are usually extra costs to take into account as well e.g. using new technology and systems to help it run more smoothly.
That being said, outsourcing generally does result in greater efficiency and profitability for the practices that use it. But you have to get the structure within your UK team correct in order for the whole picture to make sense…
It’s worth noting as well that cost-savings shouldn’t be your primary driver for wanting to outsource.
I’ve spoken to a number of practices where the cost of outsourcing is not miles away from what they would pay somebody in-house, but the benefits of outsourcing go way beyond saving a few quid…
It allows you and your team to free up time to focus on doing what can’t be outsourced:
- Building strong relationships with clients,
- Delivering high quality work to them, and
- Offering higher-value advisory focused services.
3. “I don’t think it will work/I’m scared to get it wrong”
It’s wrong to say that outsourcing doesn’t work.
Many practices all over the world are using it successfully right now and I’m sure many more will in the future.
Sure, outsourcing might not be a perfect fit for your practice, I accept that. Although most of the time it’s easy enough to move things around and make it work, if that’s what you want.
In terms of getting it wrong, think about it like this…
You are a business owner.
And part of being a business owner involves taking chances, making mistakes and learning from them.
Most successful business owners haven’t got to where they are today without getting it wrong hundreds of times in the process…
If you outsourced a few jobs and they came back completely wrong, would that kill your business?
So, the truth is that you have nothing to lose in trying outsourcing, and a lot to gain.
4. “I’m worried what my staff will think”
This one is similar to worrying about what clients think…
Sure, there will be certain staff members that might worry about what will happen to their jobs if you were to use outsourcing. And rightly so, it may be the case that when you start outsourcing certain team members become redundant.
But again, this worry can be reduced if you are open and transparent with the rest of your team about why you’re doing it and that they can expect to be doing much higher level work as a result.
Why not give it a go?
If you can see the value in outsourcing, then why not give it a go?
Decide whether you want to keep it UK based, or look at offshoring to India or the Phillipines.
Then you can contact a couple of outsourcing providers and ask to speak to some of their clients. And then you can ask them how they find the process, what works and what doesn’t work so well.
I honestly believe that outsourcing has the potential to benefit every accountancy practice (regardless of how little or much they use it for), so the question is if you aren’t already using it, why not?