David Carter, chief executive of outsourced accountancy services provider Odyssey Resources, says the original driver of offshoring activity was the simple fact that “there are not enough accountants in Australia” to service the increasing compliance workload – and those that there are don’t necessarily want to do it.
“Whether it’s fewer people doing accountancy at university or the mining boom sucking away good accountants, the fact is that as older public accountants retire, they are not being adequately replaced. At the same time, the compliance workload is increasing – especially in the SMSF area. People have to do a lot more work now to get their super fund returns and audits done, and there are fewer people to do it,” says Carter.
Lee Court, sales and marketing manager at Back Office Shared Services (BOSS), which provides accountancy services from India, concurs. “[Career-focused accountants] don’t want to do the mundane compliance work; they want to do the more interesting work – if possible, the more advisory work,” he says.
“Given the shortage of accountants, employers want to retain staff, so they don’t want to give them the boring, ‘cookie-cutter’ work. And if they’re saving 40 per cent on the cost of that work by offshoring it, it makes it doubly attractive.”
Carter says business searching for lower-cost providers is not new. “Australian businesses have traditionally said, ‘look, Melbourne’s expensive, we’ll get this work done in Geelong or Ballarat’. Sydney firms have sent work to Dubbo, Brisbane has sent work to Toowoomba. There has always been outsourcing from large, expensive centres to regional centres; the logical next step was, ‘let’s send the work overseas, providing we do appropriate due diligence on the firm to which we’re sending it’.”
Technology has also played a major role in enabling outsourcing and offshoring, says Carter, particularly with the latest crop of cloud-based accountancy packages such as Xero and Saasu. “The cloud has done a couple of things,” he says. “It allows anybody anywhere to do bookkeeping. It has also enabled overseas people to do bookkeeping online. Once it’s on the cloud, it lends itself to a lower-cost solution provider.”
Court agrees that the cloud is definitely making it easier. “We work with about half of our clients online and, until recently, with most of those clients, when we’ve been working online we’ve been working directly on their server,” he says. “But we’re seeing quite a lot of people moving over to the cloud, where they don’t have to have the hardcore IT systems to actually work with an outsourcing firm.”
The ease of use of cloud computing also fosters a “mindset shift” in services firms in terms of what they can get out of technology, says Court. “I think the firms start to see pretty clearly the ways in which data can be handled and how they can serve their clients better,” he says. “Their mindset changes around what the cloud will enable them to do: they can see how outsourcing is absolutely plugged in to that whole environment.”
Carter believes more sophisticated analysis will stay local. “The mundane bookkeeping – the compliance work – is going to be processed overseas somewhere. But the clever stuff – the interpreting, the management reports – must be done in Australia,” he says.
This means that the higher-value, longer-term analytical, management accounting and strategic planning advisory work is an opportunity for Australian accounting firms, says Carter. “You can get someone anywhere in the world to prepare the financial reports, but at the end of the day, someone in Australia has to say to the client, ‘I think you’ve got problems, your debtors have started to slip, your stock’s way out, what’s going on – you’re not in charge of your business’,” he says.
“It’s the same with the strategic planning: saying to the client, ‘What’s your exit strategy? What should your KPIs look like in five or 10 years’ time? Where should your debtors’ ratio be?’ That kind of advisory work has to be done in Australia.”
