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The pros and cons of outsourcing compliance
Outsourcing basic accounting compliance is becoming more and more common in New Zealand. There are a number of ways this can be achieved. Some choose to outsource their compliance to third parties, often based overseas. Others choose to set up an overseas satellite office of their own. While some larger international firms choose to outsource some of their work to their overseas colleagues.
Having five years of experience working for third party sales organisations, I have seen first hand both the positives and negatives outsourcing accounting compliance can have for a business. I am a specialist recruiter within the CA space and have heard a number of opinions from Big Four, Mid Tiers, large to boutique firms across New Zealand.
Many of the Partners I work with have shared how outsourcing has impacted their businesses. I have listed a few examples below:
Cost Saving
Outsourcing, in many cases, will be cheaper than hiring staff in NZ. These companies are usually located overseas where labour is cheaper, allowing them to offer competitive rates for clients and an increase in profits for the firm.
Poor Communication
A common complaint when outsourcing to countries where English is a second language is poor communication. This is often due to time differences, cultural differences and a misunderstanding of local jargon.
Utilising global networks
Most firms in NZ will have peak periods and times where the workload dies down. Global firms will often use their international network to spread the workload. This can be helpful if there are peak times in NZ and downtimes elsewhere in the world at the same time of year. They will often then return the favour during quieter periods locally.
Poor efficiency
When firms hire staff locally, quality checks are put in place to ensure each new recruit meets the firm’s high standards. When outsourcing the work, recruitment is often left in the hands of the third party who may not hire to the same standard. There isn’t always a guarantee the work will meet the standard you would have your own staff adhere to.
A couple of partners have commented on the time spent going back and forth with the outsourcing firms, in an attempt to get work up to standard, this has likely cost them more than doing the work inhouse. This is not always the case but is a risk worth considering.
More time to add value
With the more mundane tasks now being completed offshore, the local team in NZ can spend more time adding value from an advisory perspective and spend more time developing new business.
Skills gap in New Zealand
Not too long ago, I spoke with a partner who had kept their compliance in-house here in NZ. He stated he now struggled to hire Intermediate Accountants as many of them don’t know the basics of accounting. They had worked for firms that had outsourced this work.
Outsourcing compliance can have many benefits. Saving time and money while allowing your staff to focus on more interesting and challenging work is a huge drawcard. That being said, going back to basics from time to time helps to keep us sharp and can, at times, work out to be quicker and more cost-effective than managing a relationship with a third party.
How is this going to impact the market both short term and long term?
Are there any positives or negatives you have experienced personally?
Would you like to know which firms outsource so you can add more value?
Would you like to join a firm where compliance is prepared in house so you can be technically sound?
Get in touch to have a confidential conversation. Call Ben Holloway on 09 930 8520 or send me an email.