I first visited an outsourcing businesses abroad back in 2016. Offshoring wasn’t really in existence and very few UK accountants used outsourcing services for bookkeeping and accounts production.
A brief reminder that outsourcing is where you send specific tasks to be completed by a team of accountants based elsewhere (typically abroad) and offshoring is where you have your own dedicated team for your work, also typically based abroad.
Offshoring businesses have grown in India, the Philippines, Pakistan, Sri Lanka, South Africa and elsewhere. These businesses have expanded significantly as accountants have chosen to be in control of their own dedicated team with the ability to direct their skills, training and development, congruent to the firm’s own procedures. In essence, the team abroad is an extension of the team in the UK.
Between 2016 and 2024 offshoring has become the norm for more than 50% of UK accountants (or so my own research shows).
The services provided these days are not just accounting and tax but have expanded into administration, marketing, database management, human resources and many other tasks. Many accountants in the UK now also recommend their offshoring partner to their clients.
There are two main problems facing UK firms: Capacity and the cost of skilled people.
Many accountants I speak to are flat out dealing with existing clients, working longer hours to service ever increasing demands for compliance and advisory services. I talk to lots of people and despite the massive developments in technology such as Cloud accounting and work flow management software they are still struggling to meet client expectations for service delivery at a fair price.
You could argue that these accountants should lose some of their less profitable clients and concentrate on a fewer number of higher value businesses. This does seem popular to some accountants but most I meet are dedicated to the service of all their clients. Hence the issue. Maybe we are “Too nice” but I believe it is in our nature is to help people and most accountants pride themselves in serving their local business community to the best of their abilities.
The second and arguably the most important factor why offshoring is so popular is the difficulty in recruiting and retaining staff. Post Covid attitudes to work have changed and flexible working is the now the norm. The cost of living has increased and so have staff costs. Fewer people are choosing accounting as a career, citing arguments such as AI will eventually replace them and their jobs. Some firms I work with have excellent recruitment and retention polices and do not struggle at all with their staffing requirements, but they are in the minority.
You could argue that accountants should raise their prices and compensate their staff, and most have, typically by 10% this year, based on my own research. However, fewer entrants and more competition for staff in the accounting sector mean retention is a problem. People move jobs for a variety of reasons, and salary is still a key factor in their decision.
The first fact to note is that offshore BPOs like Exel, have access to a skilled and mainly younger work force. There are hundreds of thousands, if not millions, of newly graduated and (mainly) CPA or ACCA accountants. Secondly, the cost of living is lower, and therefore, staff costs are lower. Thirdly, the offshoring businesses understand the ethics, professionalism and integrity required by UK accounting firms.
It just makes sense that if capacity, staff recruitment, and retention are issues, then you should look elsewhere to access the talent you need. Offshoring, with the right checks and balances, means more of the routine work can be done abroad, leaving your UK team to focus on the advice and additional services needed by clients post Covid.
What do you think? Let me know your thoughts. Many thanks for taking the time to read my article, and I hope to see you soon!
