Texas Society of CPAs Speaks Out About Foreign Outsourcing Trends

Another perspective

What I see here is an industry beginning to embrace the implement of its own destruction. There is a logical progression to this. What do you think will happen when your clients find out about outsourcing? More importantly, what do you think will happen when your clients discover they can go directly to the same company you are outsourcing to for half of the price you are currently charging them?

It is also a sure bet that once these offshore companies feel they are ready, they will begin to actively advertise here in the US and vie directly for your client base. The paperless office makes this very possible and they are already training their staff to speak in a manner which will have your client feeling just as comfortable talking to them as they do to you.

Is the writing on the wall? I don't think that myself or anyone else can answer that question at this time. However, that doesn't mean we all shouldn't take this opportunity to do some serious evaluation of ourselves and the industry. It looks like there's going to be a new kid in the sandbox soon and he's aiming to beat you at your own game...

Sounds like protectionist to me.

Clients do it, Atty's are now doing it. We live in a Global World. Wake up before it is too late, ask the USA manufacturing companies that are no longer in business, because they couldn't change.

Clients Should Be Informed

I fear the profession as a whole will get another black eye over this issue when it comes to the attention of the general public. Accountants are not disclosing to clients that they are outsourcing the preparation of tax returns. If this practice is ok with us as a profession then why not inform the client? If there is a problem with disclosing this to the client, then an ethical problem exists. I applaud Nita Clyde and the TSCPA for their letter to the AICPA although I feel this should have been addressed by the AICPA before now.

Let's be realistic on passing these "savings" on to the client

Are CPAs really going to lower their fees due to outsourcing? I have to cast a skeptical eye at that assumption. Let's do a report on CPA firms that outsource and see what correlation exists to client satisfaction, especially in fee assessments category. I can never completely buy into the "price-reduction" theory espoused by so many, basically because of all the greed throughout the industry today.

Outsourcing may provide incentives to the business owner, but it says lots about their faith in our people and their future. While it might make good business sense from a financial impact standpoint, short-term gains can be the first step down a very slippery slope in the long run. When it comes to greed and money - "Pigs get fat, hogs get slaughtered..." We do not need another black-eye for our profession, and believe me, it is. We're always only one lawsuit away...

Ethics: "necessary but not sufficient"

Tirtha - I am a proponent of the efficiencies that come from globalization. I also have a very high regard for the education and professional standards of India.

Let's assume your comment regarding ethics is unassailably correct - where does that leave a UK or US or Canadian based firm in the event of a law suit - would there be "coverage" and if not what would the viability be of attempting to enforce financial responsibility in connection with negligence on the part of the outsourced entity?

I appreciate this borders on a legal argument so let me be clear - the issue may not be restricted to "ethics" but may transcend it to financial responsibility. Tirtha, how would your firm assure the firms retaining yours in this regard (or are they simply ignoring this issue for now)?

Foreign Outsourcing Trends

I agree completely with the Texas Board

Healthy trend

I am a UK qualified management accountant and provide a bookkeeping and accountancy service remotely from India.I am under the same code of ethics as any UK based sub contractor.I believe that clients will benefit from the cost savings associated with outsourcing to countries with lower costs of living.Employment is not being jeopardised as only transaction processing is outsourced which leaves Western practitioners with quality time to better advise clients at a price the client can afford.Incidentally, no original client documents are received by us.

confidentiality and quality

I am pleased to see a CPA association commenting on the outsourcing issue. In these circumstances, is the "due care" standard being met? I suggest not. I believe that quality of professional services and client confidentiality should be critical to our practices, and I confess I cannot see how these can be safeguarded with outsourcing. I agree - "on site advice - qualfied, certified staff" can now be marketing tools.

Globalization is not inherently evil. Pursued carefully with an eye to quality, client service and strategic alliance, global connections are all to the good. The difficulty lies in the economies of scale of larger organizations . . . and the inherently higher return required by such organizations.

Let's also look a little closer to home.

Ah, the aphrodisiac-like qualities of the desire to make more money with less personal effort. Outsourcing work out of accounting offices is not new. Haven’t many firms used contracted services or employees who work at home? The problems with outsourcing beyond the US borders are similar but more intense than outsourcing to employees at home, namely confidentiality, security and supervision. Providing a service carries with it the implication that the firm offering the service will be the one actually conducting the work. I could not look at a client eye to eye and tell them that I am going to do their work while outsourcing to someone at home, much less out of the country. Nita is right-on regarding outsourcing to foreign countries, but the first slip-up was when we got the idea that we could shift the detail work to someone outside the office not directly under our control. By the way, when are we going to shift the function of teaching our ethics courses to someone who has never even been in our country?

Same old, same old

It's the same old story throughout accounting and the country. In the name of "efficiency" we fire the future leaders of our and outsource it to cheaper and less competent contractors just so a few owners can take more money for themselves.

For accountants, this is another extension of many firms lack of concern and low pay for their employees. They love to complain that there aren't enough people coming into the profession. It is no wonder, as large firms used to boast that they were proud that 80% of their new employees were gone after a few years. Outsourcing overseas is another disincentive to work in the accounting area.

This letter may be prophetic - perhaps worth heeding

Sometimes we see clearly only in hindsight (mine's 20/20). The temptation is to dismiss this letter for two reasons - it looks protectionist and it warns of outcomes which are remote and improbable. As a lawyer, my view is that the wise will at least carefully consider the good implicit suggestions here - 1) disclosure to the client; and 2) precautions to safeguard confidentiality and security. The world is simply getting more perilous - and the sources of danger are not always obvious. We may all look back at this letter and take it more seriously in hindsight.

Outsourcing

When this is carried to the nth degree, do you really believe that your client will still be in business (Are the Indians going to buy his/her products)and that the counter person at McDonald's will want or be able to afford your services?

Also I don't believe the clients will be too pleased when (if) they find out where their data is going.

I plan to use anti-foreign outsourcing as a marketing tool.

C L Watson, CPA