Now a strategic solution for accounting firms, offshore accounting and tax services offer workforces that are highly skilled, advanced technology, and opportunities to save money. While there are a number of destinations providing these services, India has long stood out as one of the most preferred, particularly in light of its very skilled, but lower paid workforce, as well as favorable time zone differences.

However, while offshore tax preparation can be a strategic choice for accounting firms, its’ success depends almost entirely on selecting the right partner for the job.  

Here are a few questions you should be prepared to ask before making the decision to use offshore accountants, and to help you choose an offshore partner wisely and build a relationship that’s fruitful:

Q: Do I even need to hire offshore accountants?

If you can identify with any of the following signs, offshore accounting may be a strategic solution for your firm:

  • There’s never enough hours in the day

You’re constantly needing more time to complete your work and build on client relationships.

  • You can’t find talented local accountants

With a lack of qualified local accountants, your firm is always understaffed.

  • Dwindling cashflow has negatively impacted operations

The rising cost of overheads has left you with a dwindling cashflow and an inability to provide clients with a high level of service.

  • You want to shift your firm’s focus to core activities

As many accounting firms are doing these days, you want to focus on higher value advisory services and operations that are client-centric.

Q: Which services should I offshore?

To make your firm as efficient as it can possibly be, you need to determine which tasks would be best offshored. Here are some accounting services commonly offshored:

  • Bookkeeping
  • Tax preparation
  • Payroll
  • Financial analysis
  • Advisory services

It might be in your accounting firm’s best interests to offshore those tasks that are repetitive, or which take a lot of time, so that your in-house team can shift their focus to higher value, strategic activities.

Q: If my client list grows: will my chosen offshore partner be able to scale up?

Critical for any businesses success in the long term, the ability to scale up and down as appropriate is one that a reputable offshore partner should be able to do, and here is how:

  • By adapting to an increase in demand

Quality levels should remain the same no matter the increase in demand from you.

  • By allocating resources in a flexible way

Resources should be allocated in a dynamic way according to priorities and changing workloads.

  • By appropriately managing seasonal surges

Tax season is typically a busy time of year for accounting firms, and such periods of peak activity must be managed in an efficient manner.

Have a detailed discussion with offshore partners that you have selected for consideration, about how they manage resources, the size and availability of their team, and the readiness of their infrastructure.

Q: Will I actually save money by offshoring?

While it’s almost always the case that the decision to offshore saves accounting firms money, it’s essential that you thoroughly evaluate your decision before signing up to anything. Here’s how offshoring typically saves firms money:

  • On operational costs

Overheads such as office rental, plus everything in the office such as equipment and utilities, and employee benefits such as health insurance and sick pay.

  • With pricing models that are flexible

Choose from fixed fees, hourly rates or pricing based on tasks.

  • With long term value

With the reduction of errors and continual compliance, penalties and reworking costs can be avoided.

Where possible, ensure that your chosen offshore partner is providing you with transparent pricing models so that you can avoid hidden costs and get the most value from their services.

Q: Will my clients mind if we use offshore services?

Provided you can prove to your clients that by outsourcing tax preparation to India, you won’t be compromising on data security, and the quality of your deliverables will be equal to what they’ve always been (if not enhanced), there’s little reason why they won’t approve.

Answering these questions following a thorough review of your firms needs and goals for the future, should help you decide whether offshoring is in fact, a strategic move.