Preparation, Process and Patience
FEATURED FIRM: Brisbane Suburban Firm
STAFF: 20 FTE’s
LOCATION: Brisbane Suburbs
REVENUE: $1.5M – $4M
COMMENCED OUTSOURCING: 2008
In the outer suburbs of Brisbane in 2008 there was a genuine shortage of high quality graduate and intermediate accountants, due in large part to the mining boom. Those candidates who did not get high paying mining jobs had no shortage of city-based positions to choose from.
This particular accounting firm spent around six months constantly advertising positions and employing a number of very ‘sub-standard’ staff in an attempt to keep up with client work. When you consider that is takes nearly 6 months to recover on a new graduate, and that managers were pulling their hair out dealing with the incompetence and constant training of new graduates it had become a costly exercise both financially and emotionally on the firm and its staff. Finally they ‘bit the bullet’ and decided they that had no choice but to find a stable solution elsewhere.
The decision to use outsource staff did not come easily. Starting out, they were concerned about the same issues most firms would have, the biggest one being that they would be sending Australian jobs ‘offshore’ to a place where staff are not well treated and how to ensure the security of client data.
Being an early adopter to outsourcing, they have trialled a number of different models but are now advocates of full-time dedicated staff members. The outsource provider they are currently using is a firm called Backoffis and having visited the Indian office they are very comfortable with this relationship. The security levels meet world standards (they have international ISO ratings for security and are audited for this every year) and the facilities for staff there ‘looked and felt great’.
Outsourcing certainly hasn’t been all smooth sailing for this firm. One of the hurdles faced was communication, both within their Brisbane office between teams and between the Brisbane staff with outsourced team members. A level of patience was necessary as there are cultural and language differences (particularly the use of Australian colloquialisms), which needed to be overcome.
Outsourcing has however certainly solved the resourcing challenge for this suburban Brisbane firm. They now estimate that 60% of junior-intermediate level work is done so via outsourced staff. Outsourcing is also no longer limited to specific jobs or tasks; anything that is repetitive, whether it is accounting, data entry or administration can be delegated to outsourced team members.
Although it has not been specifically measured, a quick estimate is that the reduction in direct labour costs is between $90-$100k. This featured firm currently employ each outsourced team member for around $22k per annum (which includes holiday leave), whereas the outlay for a local accountant of similar skills would be around $50-$60k. The provider is also responsible for all initial training and ongoing training costs in tax law and computer programs. They also provide the desks, computers, rent etc. for the team member, which all adds to the savings.
The number one lesson learnt was to communicate to staff and have them all on board, enthusiastic and not scared of losing jobs PRIOR to any other plans being made or implemented. Just one staff member in the wrong position who is concerned about job security can bring the whole process to a halt.
The second key lesson was understanding that outsourcing was not about outsourcing the difficult jobs because no one internally wanted to deal with them. Outsourcing will not solve your difficult jobs or clients. It will however give your internal staff more time to focus on levels of accuracy, client relationships and providing additional services.
Another vital secret to outsourcing is all about the process and systems you run. It is a mantra of this firm that every staff member, no matter what role they are in, is a manager, they all manage someone. Therefore, if they want to ‘up-skill’, ‘do more interesting stuff’ and advance their career, they must delegate an existing task in order to have the time to do this. Now it is as simple as writing up a system or process that can be easily followed, training an outsource team member and QA’ing the process to ensure it is being done correctly. These internal systems must be outstanding, detailed and efficient, but more importantly, uniform firm-wide.
A final must for outsourcing is to have excellent, reliable computer systems. Without great IT systems, outsourcing could be a very painful operation. This includes a completely electronic, paperless office before starting the process at all.
This firm highly recommends other firms looking at outsourcing to seek advice from those who have years of experience. Do not jump in without completing due diligence of every aspect first and having a detailed implementation plan.
The future of the accounting profession is tax and compliance: clients simply don’t place value on it. Outsourcing is certainly driving growth for this firm. Graduates don’t want to do the ‘boring stuff’, they want to start at the top with interesting work. Outsourcing gives them a faster route to the more exciting less mundane work. Outsource staff are also increasingly involved at the data input level, in the business advisory services being offered. By giving staff time to up-skill in other areas, the partners believe they will be at the front of the curve. Contrary to popular belief, the internal staff level has actually risen by 5 people over the course of the time they have been outsourcing. So the assumption that this technique is ‘sending jobs offshore’ is a folly, in reality it has enabled them to expand into more interesting areas that clients place higher value on than tax return form filling.
Disclosing outsourcing operations to clients may be a challenge in the future with new privacy laws introduced in March 2014. In the past, the option has been to disclosed to clients that they have in-house staff and out-ofhouse staff. The out of house staff access all client records via secure lines and none of our client data leaves the Brisbane office. Going forward, however, there are several changes being made to ensure all clients are aware and given options where possible.
Outsourcing has most recently provided the capacity for a whole new division at this progressive firm – implementing cloud technology with clients. It has freed partners’ time to now think strategically and not get caught up in the day-to-day. It has changed the culture of the firm to be one of “constant improvement”.