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Myths and Realities of Small Business Offshore Accounting BPO
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Outsourcing business processes is no longer the exclusive domain of big business efficiency and profitability. Today small business organizations are
taking to outsourcing to increase their business efficiency and profitability. What began with IT-based transaction processing has
since expanded manifold to cover all aspects of business like accounting, HR management, public relations consultancy, financial
services etc. Outsourcing today is the latest tool for transformation of any conceivable business process.
However, myths still abound about accounting business process outsourcing, particularly among small business entrepreneurs.
They are still not sure whether such step can really create value for their enterprise, as in their perception, only big
business can benefit form these initiatives. Confusion still prevails on selection of accounting functions that can be outsourced to
maximize returns. However, the fact remains, accounting business process outsourcing is absolutely viable for small businesses too and
has tremendous possibilities of cost saving and value. This article explores them one by one:
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Myth: Accounting Outsourcing is for Big Business only
Reality: False. It applies for Small Business equally
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Contrary to the popular perception that accounting outsourcing is only for big business with abundant wealth, profound resources and multiple locations.
The fact remains that small business can reap great returns too by outsourcing accounting functions. In today’s fiercely
competitive global industry, every second and every dollar that you save is very important for your business. By outsourcing non-core
business activities like Bookkeeping, Accounts Receivable, Accounts Payable, Accounts Reconciliation, etc, to destinations like India,
China, Philippians, etc, where there is abundance of technically skilled manpower at almost one-tenth labor cost as that of US, small
business organizations can save substantially on operational costs. Simultaneously, they generate more time to devote to core business
issues like procuring orders, improving technology and raising resources.
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Myth: Outsourcing is only about Transaction Processing and Accounting BPO has no place
Reality: False. Almost all Non-core Business Activities including Accounting BPO can be outsourced
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When it started a decade ago, big business houses mostly outsourced transaction processing activities using high-end technology
platforms. The situation has now totally changed. Big and small companies routinely outsource Accounting, HR, Financial Services, PR
and similar functions to cost-effective destinations like India. Accounting is particularly a domain that has witnessed
tremendous growth over the past few years and has immense possibilities. Small business entrepreneurs with strong sales often need a
full-time bookkeeper to oversee the books. But, in fact, such services have little to do with the volume of sales and more to do with
the level of accounting activity, such as invoicing, bill paying, payroll and the like. Companies with a
full-time bookkeeper can save about $30,000 a year by using outsourced bookkeeping services to highly competent service providers in India.
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Myth: Accounting Outsourcing needs Complex IT integration
Reality: False. Just a Server and Internet Connectivity can work
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It’s a misconception among small business that outsourcing requires extensive IT integration. For management of outsourced accounting
portfolio of a small business, just server and Internet connectivity is sufficient to procure value-added services. The outsourced service
provider can use Remote Server model to access client’s computer securely to perform services like Bookkeeping, Accounts Receivables,
Accounts Payables, Tax Returns, Account reconciliation etc. In the
Secure File Transfer all the accounting records are transferred
securely from customer’s computer to the outsource vendor to perform the work. After performing the work the offshore vendor will
upload the files back into customer’s computer securely.
The trend has is risen sharply as more and more companies are increasingly outsourcing accounting and financial services and the
sector is growing very strongly. A IDC study entitled
US Finance and Accounting Outsourcing Market Forecast and Analysis 2003-2008 has
predicted that the global market for finance and accounting outsourcing services, which reached over $30 billion in 2003, will reach
$47.6 billion in 2008.
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Myth: Accounting Outsourcing divulges key operating information
Reality: False. The services are 100% Reliable
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No offshore service provider would risk his business possibilities by unauthorized use of accounting data of the outsourcing company.
Through secure FTP software, offshore units transfer all the documents securely into the client server. Using customer specified
accounting software, they perform all the work and export the finished accounting files back in to customer's server securely.
The customers will import the accounting files into their Accounting Software. There is no possibility of any breach of data security.
In fact, most accounting packages involve general data handling like daily sales figure, preparing an outstanding statement, maintaining
expense register, preparing tax returns etc. Small business outsourced accounting services do not ordinarily involve handling of business
critical data. Even if they are there, a reliable service provider with proven experience and credentials can handle the assignment
with trust and confidentiality to secure efficiency and cost saving for small business units.
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Myth: Accounting BPO cuts jobs, harms economy of outsourcing country
Reality: False. It promotes Growth and Efficiency
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Small business outsourcing accounting services is a major budget-balancing act and a must-consider option for increasing business
returns and lowering process time. This activity in particular and outsourcing in general does not call for job losses. The efficiency
gained through fast and less expensive outturn makes end-price competitive. More products at affordable prices improve consumer
dynamism and ultimately, everybody, from the manufacturer to the customer to the government accrue significant benefits.
This is particularly more relevant for the small business sector. By outsourcing functions like accounting, they can save costs without
compromising on quality and channel this cost saving to hiring people for operational areas to increase productivity and market sales.
Ultimately, there is no loss of employment opportunities. Moving away from non-core functions, jobs come to be more available in
high-end sectors and to meet the requirements of such jobs, levels of professional expertise, skills and knowledge of the human resource
base of the country increase significantly. The host country is the ultimate gainer from outsourcing.
Small business outsourced accounting has immense possibilities to secure greater business efficiency and higher returns and is proven all
over the world. Highly enabled service providers aided by cutting-edge technology in offshore destinations can provide extremely reliable
and value-added accounting services to ensure greater returns for small business. It’s a trend that will altogether change the face of
doing small business for good.
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