(The Hidden Third Option)
Most companies now realise that outsourcing bookkeeping services is a way to focus on things that really matter to them. But many are still grappling with the question of whether sending work offshore is the right choice and, if so, how much to commit to an offshore solution.
Many companies find themselves devoting resources to in-house accounting departments that are, invariably, under-utilised and very busy in the lead-up to tax reporting season but otherwise not so much.
And the evidence for outsourcing those jobs is compelling. Potential savings of close to 50 per cent in some situations could be realized from outsourcing non-core functions.
In recent decades many companies have taken the logic of outsourcing to its logical conclusion and sent work overseas.
A couple of factors have recently made the case for doing so much stronger.
The possibilities of the cloud.
A generation ago revolutions in cheap and easy transport and communications set off a wave of off shoring. Manufacturing companies found they could easily relocate to places where it was cheaper to do business while also being able to send the products back home.
Exactly the same thing is happening now with cloud computing and online bookkeeping services and it’s the single biggest driver of offshoring in the world of bookkeeping.
Work that can be done on a computer inside your office can be done just as easily outside it. Which makes the process of handing work over to specialists simpler than ever.
High-quality labour at the right price.
An hour’s labour from a qualified University graduate in Manila or Shenzhen comes at a far lower cost than completely local bookkeeping services in Sydney, Melbourne or Brisbane.
And it’s increasingly clear is that the gap in quality is closing much faster than the gap in costs. Asian economies such as India are growing very quickly and are helping to produce a new educated global middle class of some three billion people. This has fostered a new generation of young and skilled workers many of whom hold university qualifications in accountancy and speak English fluently.
A new approach
Offshoring was the business buzzword for several decades. Not any more. PwC and other surveyors of business leaders have found that the future instead belongs to an approach that includes local input and close contact, what’s known as “nearshoring” or “rightshoring”.
The economic logic of offshore labour is undeniable. But without any business presence in Australia responsible for risk, communication and, ultimately quality, offshoring can go wrong, undermining all of its economic pluses.
One audit company recently estimated that about half of all accounting work completed only offshore needed to be revised. The complete absence of local input can cause you further risks with legality and even insurance.
But the right provider can twin local expertise and quality with the efficiency gains of offshoring to circumvent these risks.
The rise of “rightshoring”
Outsourcing is no longer an all-or-nothing choice.
The missing middle is what business thinkers call “rightshoring”, which is realising the savings of outsourcing to cheaper, high-quality labour offshore while keeping the quality assurance and compliance guarantees that come with Australian bookkeeping.
More and more companies are turning to rightshoring solutions that provide local supervision and client management with all the efficiency gains that come with outsourcing offshore. It’s getting the balance right.