We’ve all heard the horror stories about outsourcing, so let’s not sugarcoat it. Before we talk about when outsourcing works, it’s important to be honest about when it doesn’t and what the major pitfalls are. The most common issues are straightforward: employees whose competencies on paper do not match what they can actually deliver, weak communication, both written and oral, and, finally, the simple but critical challenge of being able to reach your offshore accounting resource in a timely manner. Let’s look at each of these core problems in a bit more detail.
Most of us have worked with employees whose credentials look impressive on paper, but once you start working with them, the cracks show quickly. They struggle to comprehend instructions, they are repeatedly prone to errors, and they often lack a strong work ethic. When I was working with my Big 4 offshore team, there were instances where I had to spend a considerable amount of time explaining the problem to my offshore colleague and then even more time fixing the errors they had made. More than once, I caught myself wondering why I had bothered delegating the work in the first place.
The first and most obvious solution is to work with people who are qualified or board-certified accountants. What does this mean in practice? It means hiring individuals who are Certified Public Accountants, Chartered Accountants, or members of the Association of Chartered Certified Accountants. This does not guarantee that they will be perfect, but it does provide a baseline level of credibility that your offshore accountant will have solid analytical skills and reasonably good writing skills. The question then becomes: how do we further increase the probability of success?
This is where hiring from the Big 4 (KPMG, Deloitte, EY and PwC) makes a meaningful difference. Working at KPMG taught me, above all, a strong work ethic. Working 50–60 hours a week was considered normal, and 84 hour weeks during busy periods were sometimes expected. In the long run, that pace is not sustainable, but it does help you build stamina, focus, and the ability to prioritize what is important. It also comes with continuous on-the-job training and an ability to perform under pressure.
When you work in a Big 4 firm like KPMG, you typically specialize in a specific departments. For example, you might work in a US GAAP team that focuses on PCAOB listed entities or US GAAP engagement. In practical terms, this means you work extensively with American clients, learn their cultural sensibilities, and adapt to their working style. You also gain exposure to Controllers, Finance Managers, Senior Directors and VPs of Finance. These interactions build confidence and significantly improve your communication skills over time.
Next, let’s talk about accessibility. Communication and accessibility go hand in hand. You might have a good outsourced team member in India, but if every time you want to speak with them it becomes an ordeal, the relationship quickly becomes frustrating. If you have to make multiple phone calls and jump through several hoops just to get in touch with your off shore colleague, it does not work. This is why it is important that each client has at least one dedicated resource who serves as a single point of contact. In addition, they should be integrated into your existing systems, for example by being added to your Microsoft Teams channels, so you can message them directly and schedule meetings with ease.
Finally, you can have a highly motivated employee with an excellent skill set, but if you do not treat them well, none of it will matter for long. If you underpay them, expect constant overtime, do not provide enough time off, and treat them as interchangeable “resources”, then all the qualifications in the world will not save the outsourcing arrangement. A frustrated and disgruntled employee cannot consistently deliver high-quality work.
On the other hand, if you pay people fairly, treat them with respect and dignity, don’t work them on weekends, and communicate honestly without micromanaging, they will almost always go the extra mile for you. That, in my view, is the real foundation for successful accounting outsourcing.
Article written by: Hamza Arshad, CPA