The case for outsourcing: 3 ways to win

If you play a game of word association, “outsourcing” would be on the outs.

If you instead take a closer look at the ins and outs, “outsourcing” can offer benefits to executives and employees alike.

“For a lot of people, outsourcing is something that they see as negative. It’s people losing jobs, and sometimes that is the fact,” said Jason Young, CPA, CGMA, vice president and controller at Cask NX. “But our goal here is to talk about lessons learned and really talk about how outsourcing is a tool in your tool bag to be very strategic as a leader.

“There are very good opportunities where outsourcing is a win-win for your existing staff, your organization, and meeting the objectives of your company.”

Young and Terrell Turner, CPA, partner at TLTurner Group, broke down the powerful potential of a thoughtful outsourcing strategy during their AICPA & CIMA ENGAGE 25 session, “Outsourced Accounting Services: Lesson Learned.”

Turner currently is active in offshoring, a form of outsourcing, managing teams in the Philippines and Kenya.

“When you start looking at staffing around the world, you can find very good talent at a significant fraction of the cost,” Turner said. “Hiring someone outside may be as little as 25% of what it would cost you to hire internally.”

While potential costs in terms of company reputation and morale pose a counter consideration, Turner and Young detailed ways that outsourcing can be a “win-win.”

A win for talent retention?

It may seem counterintuitive to view outsourcing as a way to keep full-time employees, but Turner explained that much like strategic use of generative AI, outsourcing can keep employees happy.

“Organizations tend to lose really good talent domestically because you didn’t have growth opportunity for them,” Turner said. “A lot of organizations end up being able to retain really, really good talent because now you’ve allowed them to make their job more interesting.”

Turner said that outsourcing mundane work can empower in-house talent to lean into more strategic, satisfying work. In addition, one-time outsourcing of strategic work can provide another growth opportunity for in-house talent.

“Your internal staff can actually learn from someone who has experience,” Turner said. “Outsourcing becomes a strategic decision as you think about it for not only solving the immediate problem, but also setting your organization up to be able to solve the problem down the road.”

A win for efficiency

When your organization has a need that no current employee can handle — and a need that isn’t worthy of hiring a full-time employee — outsourcing might be the way to go.

“The last thing you want to do is bring in a tax director to a small business, and they’re only needed four hours a week,” Young said.

In such cases, outsourcing can be the most efficient approach — and the potential benefits for the business extend beyond the hiring decision itself.

“It’s really those efficiencies in the process, because what you’re allowing to happen is a third party to perform a lot of those things that you would traditionally do in-house — screening of candidates, making sure they’re qualified, onboarding them, making sure they do all their paperwork,” Young added. “It’s an alternative model to perform an internal service.”

A win for company growth

Even when you have your needs fully met by internal staff, there still may be value in outsourcing — especially for growth-minded businesses.

“If we could speed up our time to delivery to our clients, we could outperform other competitors and we could actually grow our business more,” Turner said. “So we strategically looked at, if a client on the West Coast is sending me a request at, let’s say, 4:30 their time, what could we do to actually get it to them faster?

“What we did is we looked at hiring a team in the Philippines. It’s almost like we have 24-hour coverage because now we have another team that is trained and proficient, and they can work while I sleep.

“When the client comes in in the morning, they’re like, ‘Wow, you got that done really, really fast.’ It’s a great way for us to strategically set the business up to grow even faster.”

A win on all fronts

A session attendee shared that his firm recently needed five months to fill a full-time position, and that didn’t even include the onboarding and system learning that followed.

“If it takes you five months to get someone in,” Turner said, “that is five months of the staff having to figure out, ‘How are we going to cover our job plus this open position?’”

In that case, outsourcing can provide a winning formula for efficiency, for talent retention, and for an organization’s growth.

“What is the extra burden that you’re putting on your existing staff when you have vacancies that may be leading to other undesirable effects?” Young asked. “Burnout is one. The other one is an increase in errors because maybe they’re working harder and longer than they should.”

Bridging the gap with an outsourcing solution, Young said, “comes in handy in rapidly growing organizations. If you’re supporting an organization that is high-growth and you have to scale, having a partner that can help staff more transactional or staff-type roles will allow you to focus on more strategic roles.

“Let’s face it, the whole question about outsourcing is, ‘What’s the ROI?’”

Editor’s note: If you didn’t attend ENGAGE, you still can access this session. Those who purchased an all-access pass to ENGAGE can log in and view this and other archived sessions. For information on ENGAGE 26, including an opportunity to save up to $350, click here.

— To comment on this article or to suggest an idea for another article, contact Bryan Strickland at Bryan.Strickland@aicpa-cima.com.