5 Great Reasons Why you should Build an Offshore Team
I’m an Australian accountant, and a raving fan of Singapore.
Without a doubt, Singapore is the shining star of Asia, yet such success brings about both opportunities and challenges for Practising Accountants.
The opportunities we label as the ‘blue ocean’. I’m going to share one such opportunity in this article that solves one of the biggest challenges you face right now – human capital.
I’m about to share with you something that is plain common sense AND is working extremely well for a small group of accountants in Singapore. It’s already been widely adopted by Australian accountants.
The opportunity and challenge becomes obvious when we look at the chart below.
|Country||Population|| GDP per capita (USD)||GDP relative to Singapore|
Sources include: World Bank 2016
Yes, I’m familiar with the MoM regulations and restrictions. Please bear with me, and think laterally!
Singapore’s success brings both opportunities and challenges for Practising Accountants
It’s fair to say that Singapore has become a victim of its own success. The cost of living in Singapore and salaries for professional staff are ever increasing relative to your Asian neighbours. Herein lies the solution to your staffing problems and a massive opportunity. Regionalisation.
Did you know that in Australia, approaching 50% of SMP firms are outsourcing, and that figure rises to 90% if you include those in the process of taking steps to offshore? Most of this outsourcing is going to the Philippines.
Here are the 5 Great Reasons Why you should Build an Offshore Team
1. Shortage of qualified accounting staff in Singapore
2. High turnover rates. The cost of recruitment, onboarding and training new team members is enormous
3. MoM restrictions on hiring foreign workers
4. High salary costs and local overheads (rent, workstation, computer, electricity)
5. Globalisation and regionalisation are not dirty words. It’s a massive global trend used by the Big 4 and multinationals for decades.
Regionalisation is now accessible to SMEs and SMPs thanks to the internet and the cloud.
“Build your perfect offshore team with TNG Global”
Sometimes I feel I’m half Asian! From 2005 to 2009, I lived in Kuala Lumpur. After 3 years in Shanghai, I then moved to the Philippines for the sole purpose of understanding the country as a destination for outsourcing and creating offshore teams.
For 3 years I immersed myself into Filipino culture and business. The result? Earlier this year I hired a Recruitment Manager and we now have a thriving offshore recruitment business to assist SMP’s around the world to regionalise and build their perfect offshore team.
Here is a list of Professional staff that TNG Global currently provides (from within the Philippines) to Singapore accounting firms:
Qualified CPA – Audit (mostly Big 4 trained candidates)
Cloud Accounting (Xero and QBO)
Digital Marketing (marketing plans, SEO, social media, email campaigns)
We recruit, and manage the payroll for your offshore team. For day to day operations, they report directly to you and your managers. They are your team. In fact, your offshore team should be treated as an extension of your local office operations. It’s one team. This is the best practice.
The Costs and Savings
What is the cost of accounting & audit staff in Singapore with 5+ years’ experience, trained by the Big 4? Scary question!
A better question is, how do you source and attract such quality candidates to your firm?!
In my experience, having visited over a dozen accountant related Outsourcing operators in the Philippines, the average accounting firm has 4 offshore staff. In Australia, it’s common for SMP’s to have a 67%/33% split, that is, 8-10 local staff, and 4-5 offshore workers.
There are 3 components to costings:
1. The Employee’s monthly salary
2. Recruitment/On-boarding fees
3. Overheads (desk, chair, office rent, computer, internet, electricity, amenities)
According to the Kelly Singapore 2015 Salary Guide a qualified Accountant with 3 to 6 years experience will earn $2,800 to $4,500 per month.
A qualified Filipino based CPA with 5+ year experience will earn around SG$750 to $950 per month.
In terms of Recruitment fees, it’s common to pay Agencies 15-20%. For a local Singaporean that could be placement fee of $7,000 to $10,000. Ouch, that’s a lot!
By comparison, TNG Global has an initial Search fee of USD$150.00, and on successful on-boarding, a Placement fee of USD$600.00 that comes with a 3 months’ replacement guarantee. Total Recruitment and On-boarding fees just USD$750.00.
Finally, to calculate the employee’s share of overhead cost, you’ll need to do the math for your own Practice, but I’m sure it’s not going to be less than SG$1,000 per month, per employee. At TNG Global we have a monthly Service fee starting at just USD$250.00 per person.
Did you add up the potential savings?
Probably something over SG$3,000 per month per employee. Plus the recruitment and on-boarding savings of $10,000’s.
So, if you get serious about this strategy and engage say 3 offshore workers over the next 12 months, you can expect total savings in 2018 of over SG$108,000 (3 x $3,000 x 12 months). I’m betting that goes directly to Partner profits, right!
I think we can agree it’s worth investigating this further.
I’m sure you are aware, the Philippines is prone to typhoons and a developing country, meaning poor internet and blackouts. TNG Global acts as a buffer and provides support to minimise disruptions which will occur from time to time. You save a lot of money, you get great workers, but there are speed bumps occasionally. In our experience, ‘up-time’ productivity during regular business hours is over 97% and when such incidents invariably arise, the offshore worker does overtime to make up lost hours.
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Thanks for reading, and I hope that you are as excited about Regionalisation as we are.
Marc R. Bruce
9th October, 2017