Lately, job outsourcing has started to affect everything from information technology to customer service to accounting. In fact, anyone whose job does not require frequent face to face interaction is a possible target of this growing epidemic. Jobs involving low-skilled workers are not the only ones being affected anymore. Now, even high-skilled jobs such as those related to medical and engineering fields are being affected (High-skilled jobs in finance). It is expected that 200,000 more jobs will be outsourced every year for the next decade (Outsourcing’s long-term effects). What does this mean for the future of accounting?
Every company needs some type of accounting aid to help prepare their financial records. Since companies cannot entirely eliminate their accounting operations, many have opted to outsource their accounting divisions to offshore countries, mostly India (High-skilled jobs in finance). These outsourcing companies have the ability to perform quarterly and annual accounting and bookkeeping tasks, all which could be done here, for less money (Finance and Accounting Outsourcing). All areas that are involved in accounting are currently being outsourced including financial statement preparation, internal auditing, and account reconciliations (Finance and Accounting Outsourcing). In some cases, only parts of a company’s accounting sector are outsourced. In such cases, outsourcing is being used to aid a company’s current staff (Finance and Accounting Outsourcing). Every company needs to know the advantages and disadvantages of outsourcing before they make a decision.
The main reason companies are deciding to outsource is that it saves them a ton of money in training and recruiting costs (Finance and Accounting Outsourcing). The people performing these accounting jobs overseas are getting paid far less than those doing the same job here in America, and working longer hours as well. Outsourcing is also beneficial because it saves companies the process of setting up and maintaining a separate accounting department (Offshoring Finance Jobs). This helps to save overhead costs for such companies. Since accounting and tax laws are being changed so frequently here in the US, it is much easier for CPA firms to outsource their accounting services to other countries (The Benefits of Outsourcing). This saves companies the hassle and cost of retraining their employees every time the laws are changed (The Benefits of Outsourcing).
Despite the benefits outsourcing accounting services bring, it does have its disadvantages. The main problem involved is confidentially issues (The Benefits of Outsourcing). Certain accounting information is supposed to be confidential, so sending it to overseas places like India poses a big threat. You can never really tell who is across the world looking at your financial statements, and what type of security is being used to screen such issues (The Benefits of Outsourcing). Other things stopping companies from outsourcing their accounting jobs include worries about compliance issues, and the initial investment that is involved for this procedure (Offshoring Finance Jobs). Businesses are not sure if the initial cost necessary for outsourcing will override the potential benefits it could provide. Some corporations are waiting for others to outsource their accounting jobs before doing it themselves; this way, they can try to gauge the potential risks that are involved before switching to outsourcing themselves (Offshoring Finance Jobs).
Accounting outsourcing is both good and bad. As of right now, there seem to be more pros than cons, mainly due to the potentially large amount of money being saved. However, businesses should not base their entire decision on that fact alone. Companies deciding whether or not to outsource the accounting division of their business should look at the advantages and disadvantages before making such an important decision.