The most frequently asked question we get at conferences, exhibition and events is, “I’m considering outsourcing.  Can you please let me know how it works with you?”.  As we are called Intelligent Outsourcing, the question is a fair one.  We reply that offshoring is the intelligent way to outsource. 

Let me explain.  The terms “outsourcing” and “offshoring” are often used interchangeably, leading to confusion. While both concepts involve the delegation of tasks to external entities, they differ significantly in scope, geography, and strategic intent. So, let’s have a closer look at the difference between outsourcing and offshoring and the ways accountants leverage these approaches to enhance their efficiency and competitiveness.

Outsourcing

Outsourcing is a simple business strategy.  A company contracts out specific tasks, processes, or functions to external providers such as freelancers or service companies. The outsourcing model is not limited by geographical boundaries, and the contracted services can be provided locally or internationally.

The primary focus of outsourcing is to reduce operational costs and enable organizations to concentrate on their core competencies.

Some accountants outsource pieces of work, such as graphic design, to freelancers on platforms like Fiverr and PeoplePerHour.  These platforms are very useful for finding freelancers who will complete business tasks which are outside your competency.  The freelancers on these platforms might be based in the UK, US or any other country in the World.    

There has also been a move to outsourcing accounting work such as tax returns and bookkeeping abroad to reduce costs and free up time.  While this does offer these advantages, there are several issues associated with outsourcing including:

1.     Quality- a major issue with outsourcing is the reliability of good work.  Your work is done by whoever in the service company happens to pick it up, so sometimes it will be fine; other times, not.   

2.     Systems and Processes– The person doing the work follows their own internal processes using their in-house systems rather than those used by your business.  This can impact both efficiency and quality and makes it very difficult for you to collaborate with them. 

3.     Lack of Commitment- There is no commitment from the person doing the work to either you or your clients. 

4.     Lack of Development- There is no opportunity to develop the individual doing the work as it could be someone different each time.

5.     Lack of Control- the single biggest issue with outsourcing is the lack of control.  You cannot control any of the above factors, so you are at the mercy of the freelancer or outsourcing company and have to hope they get it right and deliver it on time. 

Outsourcing works well for simple pieces of work such as marketing, PR, etc.  Accountancy work requires high levels of understanding, rigour and preciseness and so is not well-suited to outsourcing.  Offshoring is a much better solution for accountants.    

Offshoring

Offshoring is similar to outsourcing in that it involves a person or people in another country doing the work on your behalf.  The key difference is that with offshoring the person or team works solely with you.  The people performing the tasks are your team members who use your systems following your processes.

It is important to note that they are employed and housed by an offshore provider, like iO.  iO provides the office space, desk, IT, infrastructures etc. on your behalf and manages the HR function for you such as dealing with lateness, sickness, holiday, pay etc.

So, in comparison, offshoring gives you:

1.     Reliable quality- your team member does the tasks that you have trained them to do. 

2.     Work done your way- your team members do the work on your systems following your processes. 

3.     Commitment from Your Team Members- your offshore team members have the same commitment to developing your business and their careers as your UK employees.

4.     Opportunity to develop- your team members want to develop and you will be able to give them feedback and training as needed to improve their performance and allow them to take on more responsibility and more complex tasks.

5.     Control- offshoring gives you the same control over the work as if it were being done in your office. 

As discussed, offshoring is the intelligent way to outsource.  It allows you to increase efficiency, innovation and competitiveness while reducing your costs and the risks associated with growth. 

Take your first steps towards a more productive, lower-cost future by contacting us today to arrange your no-obligation meeting.