Xpitax News Articles
The Seven Myths of Outsourcing
By Mark Albrecht, CPA MST
While outsourcing is still a relatively young business, its impact on the accounting industry is starting to be understood. While it is still in its infancy stage, firms are starting to think about how outsourcing can be used in their practices to help them accomplish their goals. This article will explore some of the early fears most of us had about outsourcing and how most of those fears have been eliminated.
Myth #1 Outsourcing will eliminate jobs.
While outsourcing had a dramatic impact on the IT development business, with jobs being lost to cheaper overseas labor, this has not happened in the accounting industry. Xpitax does an annual survey of our clients after the busy season. The very first question we ask is whether the firm has let anyone go as a result of outsourcing. Three years in a row, 100% have come back and said they did not eliminate any jobs because of outsourcing. Most of our competitors have the same experience with their clients as well. Our clients indicated that they either use those people to do other, more billable work, or they brought quality of life back into the firm by letting people go home at normal hours of the night. Either way, jobs were not lost.
Myth #2 Outsourcing must be a very difficult process.
In the early stages of outsourcing, people were not very well educated on the outsourcing process. Even so, the process of outsourcing returns overseas was a concept that just seemed too difficult to do. However, outsourcing is a relatively easy four step process; Scan documents, outsource the return, answer questions, download the return and move to completed. It's that easy. And with a web based tracking system, the CPA firm is always in control of the return.
Myth #3 CPA's will outsource all of their work. It will ruin the profession.
Simple fact of the matter, this has not happened, and will never happen. CPA's are in the relationship business. Yes, we deal with numbers, but clients turn to us for advice. It is that relationship that outsourcing will never replace. The status quo for those CPA firms currently incorporating outsourcing within their practices is that outsourcing is complementing their in-house process. Most firms who are using outsourcing are only outsourcing 10% to 30% of the work, with the remaining work being done by in-house staff. They are using outsourcing to take the bite out of their busy season. In fact, that is why we developed XCM, which is the first fully integrated workflow engine that brings outsourcing and in-house prep together in one easy to use workflow solution.
Myth #4 By outsourcing individual tax work, young staff will be missing an important part of their career development.
This is simply not true. Using outsourcing as a complement to the in-house preparation process, internal staff will experience the work they need to help in their career path. The only difference is that they will not be working until 12:00 at night for three months, get frustrated with the hectic ness of the busy season and think about leaving.
Myth #5 Only Individual tax returns are being outsourced.
While the majority of the work being outsourced are individual tax returns, Xpitax is the leader in the outsourcing industry by providing a breath of services to the accounting industry. These include corporate, partnership and fiduciary tax returns, pre-"field work" binder set up for audits and review engagements, financial statement analysis reports and full charge bookkeeping services.
Myth #6 Perceived risk of proprietary data falling into competitors hands.
A recent article in the in one of the trade magazines indicated the about 52% of firms that outsource were concerned over proprietary data falling into competitor's hands. The way Xpitax sets up our client folder structure makes it virtually impossible for one client file to be sent to another CPA firm. We know that this is a concern and we have specifically designed our workflow process to eliminate that concern. In our workflow application, only those professionals in India see the return for the firms they are assigned, eliminating the ability to see another CPA firms returns.
Myth #7 Outsourcing is not good for the industry.
On the contrary, outsourcing is the best thing that has happened to the industry in the past thirty year. Why? We have a problem within the industry. The accounting industry is a graying industry with a majority of those in the profession over 50 years old. The reason for this is young people in college are choosing professions other than public accounting. They shy away from the accounting profession because of our long hours required throughout the year and the drudgery of preparing tax returns to the wee hours of the night. Outsourcing provides a relief by operating side-by-side with the in house preparation process by absorbing the overflow of work from the CPA firm during the busy season. Instead of working till 11:00 at night trying to get work done, CPA's who outsource are finding that they are able to go home at 7:00 at night with all their work done. Gone are the long dreadful days. This will in turn bring young talent back in to the profession.
Mark Albrecht, CPA, MST is the CEO and founder of Xpitax and a founding partner of Kirkland Albrecht & Fredrickson, P.C.. He has over 23 years of experience in public accounting, specializing in tax services. He is a member of the American Institute of Certified Public Accountants and the Massachusetts Society of Certified Public Accountants. He can be reached at 781-303-0136, email malbrecht@xpitax.com. Visit www.xpitax.com for more information on outsourcing and Xpitax including a flash demo.