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Myths vis-a-vis Realities of Small Business Offshore Accounting BPO

Small Business Offshore Accounting BPO

Mani Malarvannan

September 11, 2007

Now small business joining in the competition with big business in off shoring the accounting job for increasing the efficiency and profitability of their business.

Outsourcing today is the latest tool for the transformation of any conceivable business process. However there are some myths still present about the off shoring accounting business. But, the fact remains that 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:

Myth: Big Business can only do accounting outsourcing
Reality: It applies for Small Business also.

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, Philippines, 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.

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

After its start 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. 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.

Myth: Complex IT integration is needed
Reality: Server and Internet Connectivity is enough to do the work

It’s a misconception that outsourcing requires extensive IT integration. But 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 risen sharply as more and more companies are increasingly outsourcing accounting and financial services and the sector is growing very strongly. An 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.

Myth: Accounting Outsourcing is not reliable
Reality: The services are 100% Reliable

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; the client performs 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. Thus there is no possibility of any breach of data security.

Myth: Accounting BPO cuts jobs, harms economy of outsourcing country
Reality: False. It promotes Growth and Efficiency

Small business outsourcing accounting services is a major budget-balancing act and an option for increasing business returns and lowering process time that 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 because 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.

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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