With rapid strides in telecommunication, offshore business process outsourcing is proving to be a valuable tool to many companies. Hiring a company that is located in another country may seem little odd, but it offers numerous advantages which the companies are quick to leverage. What started as outsourcing of low end IT jobs early in the 1990 has now involved in itself entire business processes like accounting and bookkeeping. And the value proposition of accounting outsourcing today encompasses many benefits and not merely savings in labor costs.
These can be surmised as under:
1) Access to scarce talent: Talent pool in countries like US are aging and shrinking. According to a Bureau of Labor statistics about 75 million baby boomers are nearing retirement while only30 million Gen X’s can replace them. The situation is same for many European countries. In a situation like this; many companies are struggling to find the accounting talent at a reasonable rate. Off shoring bookkeeping processes solve the problem for them.
2) Transfer of costs and risk to service providers: Companies spend a lot in hiring, training and retaining staff. Then there is also the need of infrastructural facilities to be taken care of. Companies are happy transferring the cost and associated risks to offshore service providers who for obvious reasons,invest
heavily on staff development and governance programs. Companies are also thus spared of the vital management cost in running an in house accounting department.
3) Multiple services under single platform: Another great advantage that accrues to small sized businesses in particular is that a business owner has the choice of leveraging on the multiple services offered by these outsourced vendors.Since these firms specialize in small business accounting they also offer tax return services, payroll management, bank account reconciliation, financial reports,QuickBooks reports, etc. at a very moderate price. Any independent CPA would charge considerably for all these services.
4)Better utilization of financial resources: Through outsourcing tasks such as accounting and finance,companies can reduce financial risk by utilizing financial resources intelligently. For example a company need not spend on an in-house accountant when all that is needed is the service of a bookkeeper. Outsourcing of accounting services gives the companies this flexibility of selection and better utilization of financial resources.
5)Reduced Overheads and great savings: Companies can save to the tune of fixed $50000 per annum by replacing an in house accountant with an outsourced one. Also fixed overheads like payroll expenses and employee benefits can be avoided.
There are multiple benefits associated with outsourcing of bookkeeping services. A Company enjoys not only increased savings but growth in efficiency and focus towards its core business. So it is always a win-win situation for a company resorting to outsource of bookkeeping.