Outsourcing accounting services has become an increasingly popular option for accounting firms of all sizes, including big firms. There are several benefits of outsourcing accounting services to small to medium size firms. Let’s understand how it helps to Big Accounting and CPA Firms.
As per the report by Precedence Research, the global business process outsourcing market was valued at $268.21 billion in 2021 and is predicted to surpass $576.98 billion by 2030, growing at an 8.9% CAGR from 2022 to 2030.
Here’s why outsourcing accounting services may be a smart move for big CPA and accounting firms.
1. Competitive Advantage
Outsourcing accounting services to countries like India can provide a significant competitive advantage for big CPA and accounting firms. The sheer competitiveness and expansion opportunities that India provides are unparalleled.
The wage levels in India are far lower than in the US and UK, allowing big firms to adopt a cost leadership strategy that substantially reduces their costs while maintaining quality levels. This results in significant gains in market share.
Furthermore, the 12-hour time difference between the US and India facilitates overnight delivery of services, allowing the operations of big firms to run 24 hours round the clock. During the day, the major focus can be on sales and client relationship building, while work can occur from delivery centers in India during the night.
This can lead to increased efficiency, productivity, and profitability for big CPA and accounting firms that choose to outsource their accounting services to India.
2. Eliminate Lengthy Recruitment Process
Outsourcing accounting services can provide significant benefits when it comes to eliminating the lengthy recruitment process for big CPA and accounting firms. These firms frequently have a high demand for accounting professionals, which can make the recruitment process time-consuming and expensive.
By outsourcing accounting services, these firms can gain access to a vast pool of qualified and experienced professionals, eliminating the need for lengthy recruitment efforts. This allows these firms to quickly and efficiently expand their workforce, especially during peak periods of demand.
Additionally, outsourcing can also help to reduce expenses related with recruiting, such as advertising, training and onboarding. By outsourcing, big CPA and accounting firms can focus on delivering high-quality services to their clients, while delegating the accounting and financial tasks to trusted and experienced professionals.
3. Cost Effective
While accounting services may not be economical, the cost of maintaining a full-time accounting staff can be considerably higher, considering the costs of floor space, payroll, benefits, and equipment. Big CPA and accounting firms can reduce overhead costs and save money by outsourcing their accounting services.
As mentioned in the Deloitte Global Outsourcing Survey, cost reduction is the foremost goal of companies that use outsourcing.
Outsourcing accounting services also allows firms to save on the cost of training. The external service provider is responsible for training employees, freeing up the firm’s resources, and lowering expenses.
4. Focus on Core Business Activities
One of the key benefits of outsourcing accounting is that it allows big CPA and accounting firms to focus their time and resources on their core business activities like financial analysis, auditing and consulting.
Accounting is a complex and time-consuming process that can consume a significant amount of resources, especially for large firms.
By outsourcing these services to external service providers, big firms can redirect their time and resources to core business activities.
5. Increased Efficiency
By outsourcing their accounting services to external service providers, big CPA and accounting firms can benefit from increased efficiency and a streamlined accounting process.
External service providers are well experienced in handling large volumes of data and transactions, which can help improve the overall efficiency of the accounting process.
6. Access to Expertise
Another advantage of outsourcing accounting services is the ability to access specialized expertise.
External service providers have a team of experienced professionals who specialize in all accounting and tax-related matters.
These experts can help big CPA and accounting firms to manage complex financial matters and ensure compliance with relevant regulations and tax legislation.
In today’s rapidly changing business landscape, flexibility is a crucial factor.
Big CPA and accounting firms need to have the ability to adapt quickly to market changes, financial uncertainties, and other challenges that may arise in their industry.
One of the significant advantages of outsourcing accounting services is the flexibility it offers to big firms in staffing needs.
Outsourcing accounting services to external service providers allows big firms to scale their accounting services up or down based on their needs. For example, during peak business seasons or periods of rapid expansion, the demand for accounting services may skyrocket. In such scenarios, big firms can quickly scale up their outsourced accounting services to meet increased demand without the need to hire additional employees.
Similarly, during slow business periods or in times of financial instability, firms can scale down their outsourced accounting services to save costs. This flexibility to adjust the accounting services to match the current business needs allows big CPA and accounting firms to remain competitive and agile.
Along with these benefits, there are certain areas that big firms should focus on while choosing an outsourcing partner:
What should Big CPA and Accounting Firms look for ‘Outsource Accounting Firm’?
8. Reputation and Credibility
It is crucial to research the outsourcing provider’s reputation and credibility before partnering with them.
Big CPA and accounting firms should consider the provider’s experience, past performance, and client testimonials to ensure that they can provide high-quality accounting services.
9. Communication and Reporting
When outsourcing accounting services, effective communication is critical.
The outsourcing provider should have clear communication channels and provide regular reports to keep the firm informed of the progress.
Outsourcing accounting services offers big CPA and accounting firms a way to save costs by avoiding new hires and reducing overhead expenses. It can also streamline operations, boost efficiency, and allow the firm to scale up or down as needed. Further, outsourcing helps big firms stay competitive and agile in a constantly evolving business environment.
If you own a big CPA and accounting firm, all you need to do is choose the right outsourcing partner, and voila, you will get the best results you have ever imagined!