Three Outsourcing options Accountants may consider
There are three forms of outsourcing:
- Business Processing Operation or BPO (can be charged hourly or at a fixed rate);
- Employee Leasing; and
- DIY Outsourcing.
Let’s discuss each in turn…
1. Business Processing Operation (BPO)
This is a processing route which essentially involves sending work to a factory to be completed.
BPO works when a job is bundled up, and sent to an outsourcing business for them to process and return, completed to you.
This is also known as “out tasking”. You’re really giving a business the job to do so they ensure it gets done.
This means you have little control over who does the job (while you may send enough work for one FTP, the work can be completed by multiple resources) or how it is put together. The outsourcing business will use their systems and processes to complete the task, which may result in incompatibilities with your own in-house systems. (Think of when someone creates a document in MS Office and someone tries to open it in Google Documents or the Mac Pages program.) The appointed outsourcing business may well use different electronic work papers to the ones you use. Although you will still receive the job in the format you want, ie. accounting and tax software.
Note: Bigger outsourcing companies provide a file that can be uploaded to your system, as though done by an in-house resource.
Smaller companies who need to remotely access your software creates security issues and means the external workflow is dependent on the speeds and efficiencies of your system.
2. Employee Leasing
This is just as it sounds, you lease a single employee for a full-time or part-time position.
Employee leasing involves employing an accountant, whether sourced by you or by a leasing business. In the case of a leasing business, they provide a desk and computer and are responsible for ensuring that the employee turns up for work and completes tasks you have allocated. However, you are still responsible for all aspects of training, including how to use your systems and access your software.
3. DIY Outsourcing
With DIY Outsourcing, you are on your own.
In a way, it’s like starting your own business. You have to do everything, from recruiting, training and managing your new recruit. This also makes you vulnerable to many, often unforeseeable, downsides.
Warning: If you are considering offshoring, I have specific advice. Unless you speak the local language and/or are experienced with doing business in that country, I do not recommend this option.
Summary of the three Outsourcing options
|Creates instant capacity||Jobs requiring one resource, following your process||Greater control over who you employ, how they work & doesn’t require an in-house seat|
What to manage:
|>> Little control over who completes the job.>> Working with multiple people on your account instead of one.>> Watch for use of different electronic workpapers.>> Potential security issues with small companies remote accessing your systems.||>> Time consuming to set up a new employee.>> Requires in-house resources ie. desk, computer, software access.||>> Time consuming & labor intensive to recruit, train & manage a new resource.>> Issues with external resource management.>> Offshoring options may involve cultural barriers, time differences, currency fluctuations and many more, unforeseen complications.|
A Case Study in Outsourcing
I recently worked with a two partner firm, who had two employees leave the area which created a shortage of capacity.
They decided the quickest way to get this year’s compliance completed was to outsource. I asked them three crucial questions about their business. It became obvious that BPO would provide the firm with what they needed.
However, the story doesn’t end there…
The benefits of working with a dedicated person made Employee Leasing sound like a better offer. As a result, they entered a leasing arrangement, recruited an Accountant who sounded right and put them on for a trial. Unfortunately, the new accountant didn’t work out and had to be terminated.
Three months later the firm is back to being too busy to do value add work and limited by their reduced team.
This highlights the importance of a making the right decision for your circumstances.
If you need instant capacity, then BPO is the only way. Leasing is time consuming and needs to be fully planned out to include training and mentoring of a new recruit.
The Solution: choose the form of outsourcing that will support your business and achieve the results you require
How do you determine which Outsourcing option is right for your firm?
Consider these three questions for your firm.
- Do you need instant capacity?
o Business Processing Ops can enable instant, and unlimited capacity increases.
- Do you want more consistency and control over who is doing the work for you? ie. do you want one person completing your jobs exclusively?
o IF this is important, Employee Leasing gives you total control over the individual completing the job. However, note that BPO can provide exclusive employee if your volume is sufficient.
- Do you want the outsourcer to be doing it your way? (ie. using your in-house processes)
o Yes, consider the benefits of Employee Leasing.
Still not sure? The Premium Practice Clarity sessions can uncover more ways to increase capacity in your firm
I’ve become an expert at creating extra capacity for practices both during compliance time and at slower times of the year. You can ask me about this, and more during an obligation-free, casual 10 minute chat. I call this my Premium Practice Clarity session – because it’s designed to do just that… give you clarity about how your current model can become a Premium Practice.
Plus, it will…
- Expand the vision of your own Premium Practice model;
- Examine the current situation in your practice, including current roadblocks; and
- Map out the next step towards your growth goals
Although I’m currently on leave until Monday 27 October, you can check my calendar for the next available session after then by using the link below.
All you need to do is leave your contact number so I can ring you at the assigned time and we can get started on building your own Premium Practice model.
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