Accounting Small Business

Increase Your Accounting Firm’s Profitability by Offshoring

There are many benefits to offshoring some of your accounting firms tasks.

When it comes to cost savings, now more than ever, it is time for firms to think creatively. More than two years into a pandemic that had a catastrophic impact on the world, pressure is mounting on many businesses that have been lucky enough to survive under the weight of increased costs, supply chain problems, and labor shortages. As terrible as the pandemic was, it did have a few positive effects. One of them is that accounting firms became much more comfortable trying out offshoring to sustain their firm and help it flourish.   

Offshore accounting is a practice where a Certified Public Accounting (CPA) firm employs a third-party organization from a foreign nation and contracts with that business to provide various accounting services. Fundamentally, the offshore approach reduces unnecessary stress, effort, and cost while helping the firm enhance output and improve technical knowledge.

Offshoring is essentially just extending your firm with a new team of people with new (or complementing) capabilities. The only difference between it and local hiring is distance, which isn’t even a big deal in 2022.

The CPA firm needs to collaborate with the right business and have a plan to enhance ROI. Below is how a CPA firm can increase its ROI using outsourced accounting services.

Reduce Labor Costs

One of the biggest benefits of offshoring is that it can help reduce labor costs at your accounting firm. Cutting costs in a way that won’t hurt revenue is an intelligent way to increase business profits. I you look at most accounting firms, their most significant expense is labor. In the past, it was impossible to economize on labor costs without potentially harming revenue or productivity. 

Still, offshoring has opened up an exciting new option for many organizations to cut such spending without losing expertise or impacting quality drastically. It is now possible to save on employment costs by offshoring to hotspots like India and the Philippines. In these locations, their outsourcing prices are significantly lower than wages in western nations for the same talent and output quality.

Flexibility of Operations

Small and mid-sized firms can develop a flexible, cost-effective business strategy by externalizing operations through offshoring. The outsourced activities give them access to the enormous skill pool from the vendors with a focus on growth. They can exploit this to carry out scale-up strategies effectively and effortlessly. Additionally, it enables them to streamline their operations successfully while reducing operating costs.

Maintaining Control of Fixed Costs

Collaborating with an outsourced provider can also minimize fixed expenditures. Although it’s not always straightforward, businesses of all sizes constantly look for ways to reduce fixed costs. These costs include overhead like facilities, electricity, and other utilities. That is especially important for firms that are ready to scale up. For instance, you may anticipate a significant rise in fixed expenses if you were to double your on-site staff. However, these same costs would not change if you used an external team through offshoring. This change to one’s bottom line can really have an impact.

Attention to Core – Competency

Accounting firms can maximize and fully utilize their principal business structures by giving the non-core business to offshoring partners specializing in it. Being freed from the extra work reduces resource consumption and enables them to concentrate on the vital aspects of their main line of work. The additional time and work put into these essential tasks can add value to the firm’s operations and strengthen its core competencies.

In today’s society, where work from home is the norm, offshore hiring offers many benefits, including quickly and effectively scaling up your workforce without incurring any overhead costs. This allows you to save money while increasing profitability by reducing the cost of hiring offshore personnel by 75%.

What Offshoring Can Do For Your Accounting Firm – Summary

For CPA businesses, offshoring accounting services is a valuable tool. It helps them achieve their business goals and objectives by significantly reducing costs and improving productivity, accuracy, and efficiency.

Hiring a professional for offshore accounting services enhances the clients’ satisfaction levels and the overall profitability of the CPA firms. Working with outsourced accountants is a long-term tactic that aids CPA firms in expanding their businesses and obtaining a good return on investment.

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