Accounting Shortage Increases Outsourcing
Today’s shortage of skilled accounting staff may be widening the need for outsourcing, reports the Ohio Society of CPAs Corporate Focus.
Cutting costs is cited as the primary reason for finance and accounting outsourcing, according to 42 percent of those surveyed by FAO Research Inc. Lack of internal accounting and finance staff followed with 33 percent.
Seventy-one percent of middle-market companies, each with fewer than 5,000 employees, are now outsourcing at least some of their finance and accounting functions. CPA2Biz reports that if you’re sending your tax work to a CPA firm or your payroll to an agency, then you too are already outsourcing.
Middle-market managers also appear to be chasing quality, with about 32 percent of the companies surveyed saying they outsource to improve the quality of their financial and accounting services. Separately, the companies surveyed gave their internal accounting an average grade of 5.89 based on a scale of 1 to 10, with 1 meaning “extremely poor” and 10 being “exceptionally well.”
As a result, even the smallest local CPA firms are launching “Rent-a-CFO” services.
At the same time, the study found that middle-market companies are apprehensive about outsourcing, particularly about sending the work overseas. Forty-seven percent of the survey respondents said they are concerned about losing control of the outsourced process and 37 percent are not especially confident of the security at outsource service providers’ facilities.
In another survey from Everest Research, over 70 percent of finance and accounting outsourcing suppliers view technology as playing a key role in ensuring their future success – adding another factor to the growing trend toward outsourcing.
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Outsourcing within North America - another Value Added option
Our customers are receiving huge value from our finance and accounting outsourcing (FAO) services. We are based in North America, and work with companies in the USA (more than 80% of our business) and Canada, and we work mostly on www.netsuite.com which is a state of the art business (including accounting) system. Our customers, which are normally less than $50 million in annual revenue, have great success with FAO. I would agree mid market companies need to closely look at their options, however companies under $50 million in annual revenue, that are on www.netsuite.com or other web based systems should strongly consider FAO. We offer FAO starting at the CFO level right down to bookkeeping, and also include coaching, business management, 5 year financial forecasting and business process reengineering as part of our services.
Outsourcing Nightmares
Having gone through an outsourcing of 90% of the Finance department, I believe people are being misled as to the benefits. While technology may be better, the quality of skill in overseas equivalents are poor at best. Additionally, the outsource vendors are looking for quality individuals to help manage your job, often hiring your finance staff to manage the US side of the engagement. They certainly do NOT have experienced staff just waiting to get your account. Be very leary of this option. I would suggest hiring a recruiter to find good talent, rather than pursue this option. Unfortunately, the CFOs and CEOs making these decisions do not often have to deal with the daily pains of interpreting needs long distance, or the other pains associated with the outsourcing. Furthermore, they provide false assurances to others that are considering the possibilities giving reasons like lack of skills and cost cutting measures.
Keep in mind, that over the long term, outsourcing costs you greater than it saves. You will end up losing the few talented individuals that you had hope to retain. In addition, you will lose control over the very thing that keeps your business going, finances.
Anna W., CPAMaryland
and what about re-insourcing?
After more thatn 10 years of having the accounting funtion otuside with a consultant BP Colombia decided to re-isource the finance-related functions. The primary reason was not obviously the cost but regain control of the process and inject quality ot it. The shortage of highly-skilled accountants gave us no more option than recruiting the same people who previously worked for the consultant. This is something a bit contradictory.