In a world of increasing costs, tight competition, narrowing margins, talent shortages and regulatory demands, accountancy firms and businesses alike are looking beyond traditional operating models. Business process outsourcing (BPO) and shared services organisations (SSO) have emerged as strategic solutions to these mounting pressures.
‘Many businesses are looking to scale and grow in a fast-changing world, driven by advancements in technology,’ says Robert Grant FCCA, Initor Global's head of customer experience. They therefore need immediate access to knowledge, experience and expertise to meet their future plans, while also managing costs.
The accounting profession’s staffing challenge is particularly acute in North America, according to Charles McKissick, executive vice president for strategy and adviser at Unison Globus, an outsourcer with a strong footprint in the US.
‘It’s been great to be able to turn on and off the extra resource as we need it’
'Successive cohorts after the Baby Boom have been smaller due to declining average birth rates, leading to an increasing average age of the population,’ he explains. ‘There has also been a declining enrolment in post-secondary education.’
McKissick also points to increased qualification standards for CPAs in the US, which now require an additional year of university education, and the perception of poor work-life balance in the profession compared with alternatives like law, investment banking and tech.
Cost advantage
The financial case for outsourcing as a way to mitigate the talent shortage is compelling. ‘The cost of outsourcing is typically 50% less than an onshore resource and secures immediate reductions on the overall cost base of a business,’ Grant explains.
But cost savings are just the beginning of the value equation. For many organisations, the ability to scale quickly and access specialised talent on demand has become equally important. ‘We only incur a cost when we need to,’ says Alan Woods, director and founder of Woods Squared, which began outsourcing compliance services during the pandemic.
‘It’s been great to be able to turn on and off the extra resource as we need it, which has helped profitability,’ he adds.
Beyond transactional
While bookkeeping, accounts preparation and tax work remain the backbone of outsourcing services, the scope is expanding rapidly. ‘End-to-end accounting services’ for practices are rising in popularity, including bookkeeping, VAT returns, payroll, year-end accounts, tax services and company secretarial work.
‘We are seeing an increase in demand for external audit professionals based offshore’
At the same time, BPO firms are offering remote finance teams to cover all financial functions plus CFO/COO services and board-level strategic support.
Meanwhile, new services are emerging to meet evolving client needs. ‘We are seeing an increase in demand for experienced external audit professionals based offshore,’ Grant notes. ‘We also provide financial analysis and forecasting services using commercial software.’
There's a similar story at Unison Globus. 'We’re in the early stages of offering new services to prospective and existing clients as demand for IT and systems requirements expands along with audit and valuation and family-office-type services,' McKissick says.
ESG change drivers
Another emerging service line where outsourcers are stepping up centres on sustainability and environmental, social and governance (ESG), which businesses of all sizes are having to tackle as obligations evolve rapidly. For SMEs in particular, this is a complex area.
‘Our mission is to make sustainability practical and growth-oriented’
‘Our mission is to make sustainability practical and growth-oriented, especially for businesses that can’t afford to hire dedicated ESG teams,’ says Nikhil Narang ACCA, founder of Peakvisory, an outsourcing firm based in India.
‘We embed ESG into our clients’ financial reporting from day one,’ Narang says. ‘This way, sustainability becomes a part of routine business operations, not a separate compliance headache.’
Regulatory change
More broadly, regulatory developments, such as Making Tax Digital in the UK, present another opportunity for outsourcing providers. Compliance requires accountants to find additional resources to help clients maintain digital records and make quarterly submissions.
‘A cost-effective solution is to outsource monthly bookkeeping and submission of information to HMRC each quarter, avoiding the need to employ full-time professionals based in the UK,’ Grant explains. ‘This reduces the cost of compliance for those businesses and individuals affected, and allows accountants to scale their business by offering new services.’
Outsourcing's evolution
What began as a purely transactional service is evolving into a strategic partnership model. Businesses typically start by outsourcing small-scale activities, testing processes with discrete tasks before expanding the relationship as confidence grows.
The increase in volume allows businesses to ‘engage an offshore accountant on a half-time or full-time equivalent basis, working as part of the onshore team and directed and supervised by management onshore’, according to Grant.
As traditional operating models become increasingly strained by economic pressures and talent shortages, BPO and shared services are proving themselves to be not mere survival mechanisms, but enablers of strategic transformation for businesses and accounting firms willing to embrace new ways of working.
