Outsourcing accounting services to remain competitive?
An interesting report crossed our desks this week, which examines how flexible the industry is becoming with regards to outsourcing various services in order maintain profitability. The report, compiled by […]
An interesting report crossed our desks this week, which examines how flexible the industry is becoming with regards to outsourcing various services in order maintain profitability. The report, compiled by Accountancy Age in association with Forrest Brown, makes for fascinating reading, sharing current views from senior figures relating to outsourcing in the sector.
Two-thirds of accountancy firms aim to outsource
The main headline of the report is that nearly two-thirds of accountancy firms (64%) in the UK are expecting to outsource core services in the future in order to keep a competitive edge in the industry.
Furthermore, the scope of outsourcing now considered by firms has widened substantially. Over two-thirds of those who responded to the research (67%) said they will consider outsourcing “high-value services” their firm couldn’t offer. This is despite nearly three-quarters (72%) agreeing that “outsourced accountancy services can sometimes have a bad reputation”.
This survey sourced the views of over 100 decision-makers and partners at accounting firms across the UK about how they use – or plan to use – outsourcing.
Putting the customer first
Despite strong intentions of doing so, only half the firms surveyed are currently offering outsourcing services to clients. And among those who do outsource, there’s still a focus on the staples of outsourcing: bookkeeping and payroll.
The report does, however, identify an interesting emerging trend in the profession. A network of firms has emerged that use outsourcing to power up their service offerings, shrugging off the traditional expectation of using an external partner to complete repetitive, time-intensive duties like payroll.
As a result of this innovation, a diverse selection of outsourced services has blossomed. Tax planning (used by 20% of those who outsource), pensions advice (17%), financial advice and planning (22%) and R&D tax incentives (22%) are cropping up as the new breed of outsourced services, and could prove fertile ground for career development for any accountants looking to specialise in one of these areas.
Another interesting finding from the report is that cutting or controlling costs is, perhaps surprisingly, a relatively minor concern for firms choosing to outsource certain services. In fact, cost motivation ranked ninth out of eleven options. This traditional driver of outsourcing was seen as distinctly less important than more powerful, constructive motivations, such as the desire to develop specialised skill sets in-house. Other key drivers included wanting to focus on core capabilities, freeing up resources and improving service quality.
Across the board, accountants didn’t seem to be interested in the traditional race to the bottom on prices and service delivery, focusing instead on the quality of their work – indicating a potential shift in how firms view both in-house and outsourced services. It appears that many firms are now looking much longer term when it comes to their business strategies.
Commenting on the results of the findings, Jen Eastman, senior tax manager at ForrestBrown said: “Looking through the feedback, I was struck by far outsourcing has come in the profession. Over a quarter of accountants asked planned to use an external partner for R&D tax credits.
“Clearly, any widespread apprehension around outsourcing has dissipated and a new generation of external partners has risen to meet the demand for high-quality outsourcing. The traditional outsourcing staples like bookkeeping and payroll have been joined by a selection of more specialist service providers, which research suggests is a substantial desire for both accountants and their firms.”
“Outsourcing provides an exciting opportunity for accountants, particularly as client expectations continue to evolve and grow. While many already make use of outsourcing, the trend for specialist outsourcing is still nascent – the perfect time for firms to develop their competitive edge with high value-services.”