What Accountants need to know about Outsourcing and SaaS

Outsourcing and the Cloud
I’m sure you are familiar with the term ‘BPO’ or Business Process Outsourcing.

Perhaps when you hear the word outsourcing you think of customer service call centres or IT?

Well, many accounting firms are also outsourcing. I first met a small firm in Toronto in Canada back in 1999 that were outsourcing accounting/bookkeeping work to India and these days also Uganda.

The largest BPO in the Philippines is Accenture (a consulting firm that grew from Arthur Anderson back when it was the ‘Big 5’).

You may not realise that I’ve been based in the Philippines the past year for the sole purpose of creating a back-office for a B2B eCommerce venture. This encompasses outsourcing arrangements for many functions including web development, accounting, human resources and graphical design.

Think Strategically
Before we jump into outsourcing as a strategy for accountants to embrace, I need to warn you.

If you have been following The Accountants Blog and my Building a Better Practice Series, you’ll be aware that I am a very strategic person. I see the accounting profession differently. Managing an Accounting Practice is a business, and it needs to be run like a business. Failure to understand this means you probably have a glorified ‘job’ draining the life out of you. You work more hours and have more stress than anyone else in your office!

If you want more from your Practice and your life, then you need to treat your Practice like a business.

Before you consider a strategy like outsourcing, you seriously need to get your own ‘house’ in order. If you’ve read my blog series you will know that it’s entirely possible that you are climbing a corporate ladder that is propped up against the wrong building. It’s absurd to jump into new ventures without a longer term plan and strategy.

With that in mind, let’s talk about outsourcing as strategy for accountants.

Technology and Globalisation
As you scan down your P&L, what is the largest expense? Labour costs for a professional services firm are usually in the range 25-35% of revenues. Like other successful and well managed corporations around the world, perhaps it’s time to consider better ways to utilise labour.

Is it possible that you can obtain savings in labour costs through outsourcing? Did you know that you can hire qualified CPA’s at less than one-third the cost?

Thanks to globalisation and technology there are thousands of micro-businesses (not accountants) that are now outsourcing to countries like the Philippines. No firm is too small. Even sole practitioners can now access the benefits of offshoring.

At TNG Recruitment (Offshoring), we assist accountants and their clients to establish an offshore team in the Philippines, including recruitment and management of accounting, bookkeeping, technology and other administrative personnel.

Software Revolution
Beyond the obvious cost savings, a key element that is driving the growth behind outsourcing is SaaS.

Software as a Service (SaaS), also known as cloud computing, is a revolution in software. Rather than buying a licence to install software on your server (on premise), you enter a monthly subscription to rent the software. No more updates. No more back-ups to worry about. No more security issues. No more emailing of files. No more errors caused when someone uses the wrong version of the file.

It’s happening in the ERP world for larger corporations (eg Netsuite), and its happening in the SME world through vendors like QuickBooks Online and Xero Accounting Software.

Automation and integration with internet banking means that manual processing of data entry is a thing of the past. The software is sufficiently intelligent to post entries to the correct ledger account, and even allocate collections against the correct debtor! All for around USD$15.00 – $30.00 per month.

Consider the efficiencies of having multiple users online simultaneously accessing the same file: the client (eg payroll processing), the bookkeeper (reconciling in a foreign location), and the accountant.

You have a choice. Bury your head in the sand, cling to outdated systems, manual processes, and complain about your labour costs. Alternatively, embrace software technology and look at outsourcing.

A Prediction and Warning
As an accountant in public practice in Sydney in the 1990’s I witnessed the ascension of software vendors like MYOB and QuickBooks. But, it was not accountants that led the charge. It was the small business clients themselves.

Only after the clients took charge of their own accounting needs, did accountants embrace the new software and technology. A decade later, accountants became the main distribution channel for accounting software needs.

Don’t be left behind. If you don’t take charge, then your clients certainly will.

Outsourcing Jurisdictions
The two main outsourcing countries in Asia (in fact the world) are India and the Philippines.

While India is still the largest player in the market, in 2015, Manila surpassed Mumbai as the global capital of outsourcing with over one million people employed in outsourcing and continuing to expand at double digit growth levels. It’s a massive industry and its growing fast.

Despite infrastructure drawbacks like slow internet connectivity, the Philippines continues to grow due to its large educated talent pool, friendly culture and Americanised style of English.

Other Outsourcing Services
Clearly there are other administrative tasks that accountants can outsource. You can engage a full-time Virtual Assistant (VA) in the Philippines for around USD$350.00 per month. Micro-businesses, particularly in North America and Australia, are increasingly engaging VA’s to leverage their time for more important strategic tasks.

Another opportunity for accountants with outsourcing is systems development. SME clients can benefit immensely by creating Operational Systems, HR processes, and other Policies & Procedures.

The Opportunity for Accountants
The opportunity is for accountants to take control of this domain for their clients.

It’s an opportunity to reduce costs and drive efficiencies, but also to create new revenue streams. Previously, when I was in Practice I never wanted to touch source records and bookkeeping. However, cloud accounting and offshoring means its a whole different ball-game.

It’s an opportunity for accountants to get closer to their client and assume the role of CFO for their clients.

If you bundle the software into the service, this builds ‘stickiness’. Meaning the client becomes more loyal to you (sticks with you) and less likely to leave.

Accounting Partner Programs
Both QuickBooks and Xero have Accountant Partner programs. Xero claims to have over 600,000 users and the market leader in the United Kingdom, Australia and New Zealand. QuickBooks Online has 1.5 million users and the leader in North America, although Xero is also now a major player with four offices across the United States.


Following certification, accountants receive a margin (or discount) for each client subscribed to the software platform. The margin depends on the number of clients you have signed up and starts at 15%, increasing to 30%. Click here to check out the Xero Partner Program.

For a more detailed comparison of the two market leaders, click the link to access a report by USA based Sleeter Group entitled “QuickBooks Online Vs. Xero” (reviewed 27 October 2015).

Many accountants are moving to value billing and bundling the service to clients via a fixed monthly fee. As part of that fee, they include the cost of a subscription to QuickBooks Online or Xero.

If you decide to participate in this program, the software vendor will be billing you, not the client at the reduced rate. You’re responsible for collecting the fee from the client.

Do the maths. Assume you have 100 clients that pay you $500 per month. Outsource the bookkeeping/accounting:

Fees Received $USD    $   500 pm$          600,000
 (100 clients)
Software     $    20 pm              24,000
Labour        15.00%              90,000
Direct Costs            114,000
Profit$        486,000

This is just the tip of the iceberg in terms of revenue generation. As your client’s ‘CFO’, there is more value to be added.

Upon login, the software provides the Accountant a Dashboard to monitor each client’s accounting files, and there are other features like ‘cloud’ based file storage. For example, you can upload the clients Financial Statements as a PDF file accessible to the client when they login to the platform. So, instead of using a product like DropBox, you can store and share files via the accounting platform which makes more sense.

Different users are granted appropriate levels of access depending on their role.

If you (as the accountant and your client’s business advisor) are not driving these efficiencies, then you are running a risk the clients will simply bypass you or, worse, engage a more progressive advisor.

Advanced Features
Both QuickBooks Online and Xero come with a huge range of third party add-ons or apps. Advanced inventory, eCommerce integration, etc.

To take this a step further, there are mobile apps where the clients’ employees can manage their expense claims ‘on the road’ using their mobile phone. Employees take a photo of the expense receipt or voucher, which is then uploaded to the app for payment approval and a GL code. The expense is then automatically integrated into the accounting system. Once uploaded digitally, the piece of paper can be trashed by the employee.

TNG Global and Outsourcing
At TNG Global we are assisting accountants and their clients with offshoring of accounting, bookkeeping and administrative needs to the Philippines. Click here for more information, or simply complete the form below to register your interest and ask questions. We’ll be in touch with you.

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    By all means share this post with your partners and email me if you have any questions or comments. You can print a PDF version by clicking this link: Outsourcing and the Cloud.

    I hope this piece got you thinking!


    Marc R. Bruce
    19 November 2015

    About the Author
    MarcPicMarc Bruce is an Australian accountant, and the founder of TNG Global,
    a Community for Accountants who are making a difference in the world.


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