Offshoring for CPA firms: The hows and whys

The fact is that establishing a foothold in India, China, Eastern Europe, South Africa, or the Philippines takes time and effort, and even large firms find the undertaking challenging.

Of the more than 1,100 firms that participated in the AICPA’s 2023 National Management of an Accounting Practice (MAP) survey, about 30% said they outsourced domestically and 25% said they outsourced to offshore workers. Another 14% said they planned to start outsourcing domestically, and 12% said they planned to start offshoring.

The CPA talent shortage and an increase in demand for accounting services in the United States are prompting many firms to go beyond their traditional hiring practices and explore the global talent pool and staffing across time zones.

But developing a successful strategy to offshore billable work is more complex than extending your recruiters’ hiring reach. (See sidebar, “A Small Firm Finds Its Overseas Groove.”) Seasoned hands compare it to investing the time and effort necessary to prepare for an overseas acquisition.

It starts with determining which strategic approach is best for the firm:

• Contract with a third-party vendor to hire, train, and manage staff, and establish a service level agreement (SLA). The SLA will determine the work the third-party employees will perform using the firm’s technology. This is the traditional outsourcing approach suitable for any size firm.
• Tap a pool of offshore talent established by a third-party vendor as needed or contract project by project. This typically works for small firms or to relieve seasonal bottlenecks.
• Become an employer of record offshore. This requires the firm to establish an office overseas and hire, onboard, and train employees who will provide services using the firm’s technology. This requires investment of time, money, and travel similar to establishing an overseas subsidiary and tends to suit midsize and large firms.
• Build and operate an overseas office to offshore services and transfer resources in that office to other firms on a subcontract basis. Large and experienced firms tend to use this approach.
• Subcontract resources in an overseas office another firm built and operates. This can suit small firms just beginning to offshore. The strategy selected will determine a firm’s next steps. This article covers the practical “hows” and “whys” of moving to offshoring as a hiring strategy for firms.

PLANNING AND PREPARING STRATEGICALLY

A lot goes into deciding to hire off-shore talent, but once the decision is made, research and planning are paramount.

A key step in that planning process includes conducting a technology infrastructure assessment to make sure your infrastructure can support offshore teams.

How: Evaluate your current technology infrastructure and determine any necessary upgrades or additions needed to support remote collaboration.

Why: If the offshore team doesn’t have what they need to collaborate seamlessly, it can lead to frustration on both sides and, eventually, turnover. Being proactive and taking care of any issues in advance of hiring and onboarding will set you up for success.

As you research potential offshore locations to hire talent, consider workforce availability, living costs, political stability, language barriers, culture, time zone compatibility, and legal and compliance implications. For example, AICPA & CIMA offshoring tools include a list of holidays and an offshoring vendor due diligence checklist. With this information in mind, you can make quality decisions and build your recruitment plan accordingly.

How: Gain a deep understanding of each country’s work culture and communication styles and incorporate them into your plan.

Why: Selecting locations where the work culture aligns well with your organization’s culture and values is crucial for long-term success. If your organization prefers employees to work autonomously with the freedom to make decisions, but the offshoring team wants and needs a playbook for every situation and decision, then it may not be the right fit. Misalignment in work expectations can lead to significant challenges.

Just as the basis for any job should start with a clear understanding of the role’s objective and what it will entail, the same goes for creating offshoring job descriptions. Don’t just repurpose the existing templates you use in hiring onshore workers. Make sure to include specific technical skill requirements, software proficiencies, language requirements, and industry knowledge essential for the role. In building your offshore team, be transparent about what the onshore and offshore teams will do, how they will collaborate, and when and where there is overlap.

How: Write a clear and concise job description listing the required skills and tasks. Design and communicate the interview and evaluation process that assesses accounting, technical, and soft skills, plus cultural fit. Include the onshore team in the process so they can provide input on the roles and structure of the offshore team.

Why: Being intentional with the tasks and responsibilities of both the onshore and offshore teams and precise in job descriptions provides transparency, attracts qualified candidates, and streamlines the screening process, saving time and resources.

HIRING AND ONBOARDING OFFSHORE TALENT

Once you’ve completed your research and planning, written job descriptions, and established a recruiting plan, the next step is to recruit, conduct interviews, and start hiring. It’s essential to approach this process methodically, considering the order in which different roles will be filled.

How: Develop a tiered hiring plan, starting with leadership positions, and clearly outline the reporting structure.

Why: A structured approach prevents the chaos of trying to fill all positions simultaneously. Hiring from the top down ensures proper leadership is in place to guide subsequent hires. Local leaders can provide valuable insights into the regional talent pools and work practices and can serve as cultural bridges, facilitating a smoother integration process.

Upon successfully recruiting your offshore team, you need to implement a tailored onboarding and training program that addresses the unique challenges of integrating remote, international team members.

How: Start by developing comprehensive, culturally sensitive onboarding materials. Then, document clear standard operating procedures with an emphasis on technology and data security. Lastly, remember to provide any language support needed and soft skill training to ensure effective communication.

Why: Standard onboarding approaches designed for onshore hires often rely on implicit cultural and operational assumptions that may not apply in an offshore context. By developing tailored materials and processes, you can preemptively address these potential areas of confusion or misalignment.

After hiring and initial onboarding, the critical next phase is integrating offshore and onshore teams. Err on the side of over-communicating so that everyone understands work expectations, company policies, team protocols, career path, salary, rewards, and incentives for each role. The AICPA & CIMA offshoring tools include communication channels for outsourcing success.

How:

• Comprehensive documentation: Adequately train the team on robust, easily accessible documentation covering all aspects of operations and expectations. Ensure materials are easily understood by team members from diverse cultural backgrounds. Put controls in place as new team members start to follow the processes.
• Mentorship program: Consider implementing a “buddy system” where you pair new offshore hires with experienced onshore team members. This can help facilitate knowledge transfer, cultural integration, and personalized support.
• Meet and greets: Host virtual regular meet and greets to foster connections across locations. Use diverse engagement formats such as breakfasts, games, and evening snacks to accommodate different time zones and work schedules.
• Consistent check-ins: Establish a structured system of regular check-ins at both team and individual levels. Use these touch-points to address concerns, answer questions, and ensure ongoing alignment.

Why: This comprehensive integration approach mitigates the risk of information gaps that could lead to misunderstandings and inefficiencies. It also actively combats feelings of isolation among offshore team members. This approach recognizes that successful offshoring extends beyond task allocation, encompassing the full integration of offshore team members into the company’s operational and cultural fabric.

MANAGING THE OFFSHORE TEAM

While hiring and onboarding are crucial steps, the ongoing management of your offshore and onshore teams is vital for long-term success.

Effective management creates an environment where your offshore team feels valued, integrated, and motivated to contribute their best work. The AICPA & CIMA offshoring tools include outsourcing best practices to consider as you develop and execute your offshore management strategy.

They include:

■ Optimize workflow across time zones.

• Strategically assign tasks to leverage the global clock, enabling 24-hour productivity.
• Implement handover processes to ensure smooth transitions between shifts.
• Set expectations and leverage project management tools.

■ Promote cross-team collaboration.

• Make sure there are hours where the onshore and offshore teams overlap and encourage regular communication, both verbal and written, at all levels.
• Organize cross-functional projects that integrate team members from different locations.
• Facilitate knowledge sharing by implementing a rotational program or temporary assignments for team members.

■ Cultivate a unified company culture.

• Share and demonstrate company values while respecting local cultural norms.
• Engage offshore team members in discussions about how company values align with their cultural context.
• Create opportunities for cultural exchange and learning between onshore and offshore teams.
• Be open to innovative ideas from all team members.

■ Invest in professional development.

• Provide clear learning and career paths for all team members.
• Offer upskilling opportunities tailored to individual and team needs.
• Develop consistent performance evaluation criteria for both onshore and offshore teams. Schedule check-ins and regular performance reviews so two-way feedback is captured and issues are acted upon in a timely manner.

■ Leverage technology and prioritize data security.

• Provide all team members with access to necessary applications and resources for their designated role and review access regularly.
• Regularly review and update your tech stack to support evolving team needs.
• Implement stringent security protocols across all locations.
• Provide regular training on data security and cybersecurity best practices.

BUILDING SCALABILITY AND RESILIENCE

When implemented strategically, offshoring presents a unique opportunity to access a broader and global candidate pool with the ability to build high-performing teams for the future. Diverse, global teams can enable CPA firms to not only overcome a current talent shortage but also create a more dynamic, innovative, and resilient profession for the future.

The path to successful offshoring may present challenges. However, with careful planning, cultural sensitivity, and a commitment to continuous improvement, it can offer persistent benefits and rewards to firms and businesses.

A small firm finds its overseas groove

In 2018, a five-employee Atlanta CPA firm doing a lot of tax work decided to offshore part of its expanding load. 

The firm opted to contract with a third-party vendor in India, a country where English is an official language, rigorous training is required to become an accountant, and outsourcing centers have supported business’s back offices for decades. The firm asked to start with one person, whom the vendor hired, trained, and set up. 

The firm’s team members, who were used to working virtually, understood the importance of setting up workflows, processes, and controls before pushing tax return billable hours offshore. The approach proved successful, and within months the firm had offshored enough work to India to keep three people there busy. 

One year into the contract, the vendor experienced turnover. The firm initially switched to offshoring project by project and then decided to become the employer of record for its India staff. The firm hired one employee in India they had worked with the year before who was groomed to become team leader, recruited eight others, and took over onboarding, training, and managing the offshore employees. 

Five years in, the firm has set up an office and offshore infrastructure and is managing staff fluctuations on its own. The eight team members in the India office do tax and accounting work. 

For example, offshore employees doing tax work gather and organize data from clients’ documents, begin the initial preparation, and perform a self-review. They provide the onshore manager with a drafted email with missing items and clarifying items to confirm with the client. The onshore manager works with the client and completes the tax return preparation. Tasks are tracked in workflow management software to ensure turnaround is timely and fluid. 

The firm offshores about 12,000 billable hours per year.

About the authors 

Laurence Whittam is a strategic outsourcing adviser and managing director of New Jersey-based Impact Global Solutions. Kane Polakoff is principal and Client Advisory Services (CAS) practice leader at CohnReznick LLP in Michigan. To comment on this article or to suggest an idea for another article, contact Jeff Drew at Jeff.Drew@aicpa-cima.com.

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AICPA & CIMA MEMBER RESOURCES

Articles 

“Offshoring: 5 Lessons Learned for Success,” AICPA & CIMA Professional Insights, March 14, 2024 

“Expand Your Horizons: 5 Tips to Build Effective Global Teams,” FM magazine, Feb. 22, 2022 

“How Automation Is Driving Indian Finance Teams to Upskill,” FM magazine, June 30, 2021 

“Centralising Services: The Bigger Picture,” FM magazine, June 1, 2018 

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“Boosting Firm Capabilities With Offshoring”, Small Firm Philosophy podcast, Sept. 6, 2024 

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PCPS Outsourcing for CPA Firms