Over ten years ago, forward-thinking Australian accounting practices started outsourcing part of their work and processes overseas. Initially, the outsourcing started with basic bookkeeping but has now grown to include administration, marketing, sales, tax preparation, and auditing. Almost any service or process that does not need to be done in front of the client can be outsourced.
The benefits of outsourcing include:
- Reduced labour costs – Labour costs in ‘low labour cost’ countries can be $3, $5 or $10 per hour. Minimum wages in these countries are as low as $1.50 per hour.
- Increased practice efficiency.
- Greater ability to focus on your core business – Every practice has limited resources, and outsourcing can help a practice focus on work that really serves and benefits the client.
Fast forward to 2018, and Australian accounting practices have either joined the outsourcing bandwagon or are considering it. There are now literally hundreds of Australian and overseas companies providing outsourcing services to Australian practices. Barely a day goes by without a phone call or email from an outsourcing company offering their services.
The growth of outsourcing overseas is a double-edged sword for accounting practices. Although their practice labour costs will dramatically fall, so to will their revenue. Accounting practice clients are not fools and are demanding their accountants reduce their service fees. Compliance services, for example, have fallen over 30% in the last three years alone. This trend will only accelerate.