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[edit] Outsourcing Accounting
“Outsourcing[[1]] involves the transfer of the management and/or day-to-day execution of an entire business function to an external service provider”. Simply put, it is the farming out of services to a third party. In 1998, many people would not believe you if you told them that in ten years most of their financial, tax and accounting services would be outsourced to India, because of lower cost and greater efficiency. But, as the 2008 tax season wraps up, this form of outsourcing is no longer frowned upon, but accepted in the accounting area. Accounting is one of the most essential pieces of a business, since it ensures that all decisions are economically sound, and for that reason securing accounting outsourcing services is imperative to all small and large sized accounting firms.
[edit] Fears of Outsourcing Financial Services
While many Americans have begun to recognize sending jobs such as clerical, customer and technical support overseas, many accounting and law firms have been sluggish or wholly averse to doing so. The main fear of these firms is client confidentiality, and they are apprehensive about sending information overseas that may perhaps lead to leaks or stolen information. “Many of these firms draw the line at sending client billing or confidential information out of their offices, let alone out of the country.”[2] However, as these firms begin receiving pressure to reduce cost from corporations who want lower bills, several of these firms have begun to take small steps towards outsourcing overseas. Outsourcing intermediaries argue that their Indian-based operations adhere to stringent protection measures in order to shield the integrity and confidentiality of client data. “For example, some employees of Indian firms are required to sign nondisclosure/confidentiality agreements. Data are encrypted during transfers to ensure their integrity. Additionally, access to data-processing centers is restricted by biometric palm scanners that verify employee identification.” >.com Further security measures include scanning source documents in the United States before they are conved, and printing the returns stateside in order to sustain a paperless environment in India.
[edit] Statistics
As of recent, outsourcing financial services takes up 11% of the market, falling behind some of the more readily outsourced positions, such as Information Technology at 28%, and Human resources at 15%. [3] Some studies show that the global market for outsourcing finance and accounting operations is expected to grow at a 9.6% compounded annually growth rate, and exceed $47.6 billion in 2008. The most popular destinations for these jobs being outsourced are; India, China and the Philippines.[4] With low wages, and work hours that start when ours finish, hiring these companies for financial services could prove to be very efficient and profitable. On the other hand, the reality is that wages in India and other nations we outsource to are also rising. It used to be a cost advantage to outsource with a ratio of 1-to-6 and today it is at best 1-to-3. As the cost structure begins to dwindle from 1-to-3 to 1-to-1.5, it will become inefficient for accountants in the United States to outsource to other countries.
[edit] Chief Objective
One of the chief objectives for any business is to maximize profits while minimizing costs. Accounting outsourcing makes it possible for a business to cut down on the money and time that it spends on this job while at the same time ensuring that the financial functions are competently handled by qualified professionals. ezinearticles.com/?India-Outsourcing-Accounting-Is-Gaining-Immense-Popularity-Globally&id=646837 Outsourcing simple functions to India is gaining wide acceptance, as stated above, and is gaining popularity in the Accounting community because it allows them to focus on their core business. It also frees up time to build relationships with potential customers as well as maintaining current relationships.
[edit] Greatly Perferred
India is becoming more computer literate and more educated; and, therefore, outsourcing turns out to be a sensible solution for both the company engaging in outsourcing and the client. As a result, many companies are rushing to hire Indian outsourcing accounting services for the financial benefits and the simplicity it presents to every client.ezinearticles.com/?India-Outsourcing-Accounting-Is-Gaining-Immense-Popularity-Globally&id=646837 Also, because the services are tailored to suit the desires of each client, and most vendors offer 24/7 assistance, it guarantees that the client does not have to go through the least bit of aggravation to obtain the accounting data. India outsourcing accounting has consequently developed into a greatly preferred course of action for companies worldwide.
[edit] Extras
For more on outsourcing financial services please visit Thomas Friedman’s Wikipedia site[5], or pick up his book, The World Is Flat.[6]
[edit] References
^1.Overby, S (2007) ABC: An Introduction to Outsourcing. CIO.com.
^2. Creswell, Julie. Law Firms Are Starting To Adopt Outsourcing." The New York Times 27/10/2007, natl. ed
^3. Pinto, Jo Ann. "Swimming Against the Tide: The Hidden Costs of Offshoring." The CPA Journal. 2005. 27 Apr 2008
^4. "Accounting Outsourcing ." Cyber Futuristics. 2008. 23 Apr 2008
^5. Friedman, Thomas. The World Is Flat. 3. New York: Farrar, Straus and Giroux, 2007.
7. Harbor, Allies. "India Outsourcing Accounting Is Gainging Immense Popularity Globally." Ezine Articles. 16/07/2007. 21 Apr 2008
