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Cheap-Ass Firms Are Loving This Outsourcing Thing

two United States pennies to symbolize cheapness, stingy

Is no one concerned about the brain drain happening at the lowest levels as all the grunt work that used to train newbies gets sent overseas? Are we quickly headed toward a world where entire teams from manager on down are in another country? And does this mean clients will get a break on fees since the talent is so much cheaper? LOL to that last one.

For the TLDR gang who can’t be bothered to read articles, here’s a screenshot of the article we’re going to discuss. For readers of words, continue on.

This article from Accountancy Age could possibly be a poorly disguised ad for AdvanceTrack’s services but just in case it’s not, it has some figures we can refer to in 2030 when all the work has been offshored and regulators are scrambling to figure out who should pay for mistakes made because of it.

Figures show an significant rise in firms choosing to outsource their accounting services, with a near 40% increase in global spend and a 20% surge in interest over the last five years. [emphasis ours]

Vipul Sheth, Managing Director of AdvanceTrack, one of the UK’s fastest-growing outsourcing accountancy firms, likens the rapid ascent of the outsourcing industry to the revolutionary impact of generative AI in 2023.

“The surge in popularity is because people are looking for high levels of service at a cost-effective price point,” Sheth explains. “Add to this the lack of a strong pipeline of talent coming through, and it’s understandable to see outsourcing swiftly gaining momentum.”

“Figures reveal ‘enormous’ rise in firms choosing accountancy outsourcing as industry faces ‘pivotal’ moment,” Accountancy Age March 26, 2024

Wow he really said the quiet part out loud. The article talks a lot about “operational efficiency” and “cost savings,” actually. It’s Vipul Sheth’s belief that more than half of companies will be outsourcing some or even all of their accounting work ten years from now. Let’s hope India and the Philippines don’t run out of accountants before then (see: The Philippines is Running Low on Accountants and US Firms Should Be Worried).

Nothing to worry about here.

Figures reveal ‘enormous’ rise in firms choosing accountancy outsourcing as industry faces ‘pivotal’ moment [Accountancy Age]

7 thoughts on “Cheap-Ass Firms Are Loving This Outsourcing Thing

  1. For the longest time, I was opposed to the government coming in and taking control of the auditing profession. But I’m starting to change my position. What we have is accounting firms being run by greedy, amoral accountants. The partners only care about squeezing as much money out of the firm during their short time in power. They have no concern about the current state of the profession, its future, or even the viability of our financial markets. None.

    The rich old (white) bastards running the accounting institutions in this country (the accounting firms, the standard setting bodies, the AICPA, etc.) are absolutely destroying our profession for their own gain. Perhaps they cannot be trusted with such an important responsibility of providing assurance as to the quality of companies’ financial statements.

    1. As if the government needs another opportunity to coerce companies that are out of favor with the administration of the day. Bonus points for throwing in a race angle to promote the spirit of “waaa waaa it’s not fair that partners make the most money in the organization.” I guess those reviews keep coming up short.

      You know who really sets the prices in our industry? Clients; same as every other business that sells anything. Clients don’t want to pay the price increases that pay the associates. And if you pay the associates more, what will the managers and directors want? Then you act like partners should be cool with everyone else making more money at their expense.

      You’re an accountant who doesn’t seem to understand economics, or people for that matter. Calling others greedy when it’s you who wants more in exchange for nothing more, while typical, is just the pot calling the kettle black – or white, in your case.

    2. While I don’t disagree with what you’re saying the issue is more complex. The cost of education in the US is out of control and obtaining an accounting degree has very poor ROI. Accounting work at staff level isn’t just grunt work, but detailed grunt work. To me the solution is to subsidize the cost of education, possibly even to the point of making it free. The brain drain in accounting is definitely a national security level issue. Unfortunately everyone over 60 simply wants to cash out and get as large an exit check as possible. 100% greed / selfishness has ruined the profession and the injection of massive amounts of private equity will only make things worse. PE wants to turn CPA firms into Subways: corporate or franchise owned stores, low wages, low quality product that is marketed as best in class.

  2. I think there is some merit to government oversight for the audit profession, particularly for PCAOB audits, in that the financial statements are being relied upon by individual investors seems to be a solid reason for more oversight. The current state in which if an audit team does find a material misstatement, they are more scared of losing the client and revenue than accurately representing the financial statements to users and will find creative solutions to resolve such misstatements without and adverse opinion. They problems are still there, its just lipstick on a pig.

    From a tax perspective, outsourcing does appear represent a pretty substantial security risk in that droves of person and sensitive information are being sent overseas, often without the knowledge of the information owner – burying 7216 language in a 15 page statement of work aside. And it is unclear what safeguards are in place at the outsourced firms to protect such information. Its only a matter of time before there is a major data leak and this all goes away. I find it curious that the US government is passing legislation to ban tik-tok for simply having a Chinese owner (pending divesture), but who knows who owns these outsource firms and who they are selling US personal information to.

    Finally, its not only greed sending these firms to offshore lower level work. There is a legitimate pipeline problem for public accountants in the US and this is a band aide solution in an effort to keep prices low. AI will likely help out here as well but that comes with its own set of issues. It will be an interesting 5-10 years for the industry as these issues get sorted out.

    1. Regarding your last paragraph – IMO if the Big 4 wanted to increase the pipeline in the US, they could tell the AICPA and NASBA to drop the 5th year requirement and it would happen in a few months. I think the lack of accountants is, as the old saying goes a feature and not a bug.

  3. I’ve worked on all sides of the spectrum, and being an accountant in today’s world stinks. If you read any of the new job opportunities for accountants, the job description of duties and requirements is miles long and very detailed. Staff accountants are to be very educated and possess working experience to have gained the skills needed to work at a tedious job with long hours.

    It’s very rare to find a CPA or Bookkeeping firm that compensates for the work they require. Accountants deal with money, income, profits, banks, government agencies, etc, all on behalf of others. All things considered, the wage does not even come close to what it should be.

    Now, jobs are being replaced by people overseas at a lower cost; I picked the wrong profession.

  4. The issue of mistakes being made is actually one point which will bring this whole outsourcing thing crashing down in my opinion. I work at an accountancy firm that has about half of the staff overseas, and the lack of detail, lack of foresight, and lack of communication has nearly killed the company. So many client complaints and clients churning, so many US staff leaving because they just can’t deal with the disorganization now. What was once a strong company has now crumbled due to this outsourcing thing. And….you guessed it, fees have increased for a lower quality product. It’s all about greed at the top. Perhaps, when all the clients have left and the company destroyed, they might have some regrets. Clients who deal with outsourced accountants are now jaded, and mention they are only looking for US support to handle their books going forward. As for me, I don’t really care. There will always be someone willing to pay the big bucks to have their books cleaned up after such messes, so I’m not too worried. I do feel sorry for new accountants trying to break into the industry. Everyone wants years of experience for a staff accountant position which should be entry level, which I find to be ridiculous.

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