Offshoring and Outsourcing in the CPA Industry: Navigating the Talent Shortage with Alternative Solutions

The accounting profession is undergoing a significant transformation, with offshoring and outsourcing emerging as strategic approaches for CPA firms looking to optimize operations, reduce labor costs, and access talent. This trend is reshaping how accounting services are delivered and managed in an increasingly interconnected world.

To better understand the current landscape of outsourcing and offshoring in the accounting profession, we surveyed CPA firms about their experiences with these resources. Many firms shared insights into their strategies, revealing a growing trend of leveraging global talent for various accounting functions. The survey highlighted that successful offshore integration often requires patience, planning, and a commitment to building effective cross-cultural working relationships.

Our poll defined outsourcing and offshoring as follows:

• Outsourcing – hiring a third party located within the US to complete work
• Offshoring – hiring a third party or employee outside the US to complete work

Key Highlights

• A majority of firms have dipped their toes into the outsourcing and offshoring waters and are utilizing this talent to help get work done. Firms are utilizing this labor pool in traditional service lines (Audit & Assurance, Tax, and CAS) and for other advisory and internal administrative functions.
• While firms utilize these resources, most work is still being done internally. 83% of firms outsourced 10% or less of total firm revenue.
• Over 75% of firms that used outsourced or offshore talent plan to increase or keep the amount of work sent to them the same next year.
• The challenges are real, but firms are also seeing advantages. In an industry where local accounting talent is scarce (and expensive!), firms can serve the clients they want, reduce staffing costs and keep domestic staff engaged by outsourcing more mundane and lower-level tasks. Not surprisingly, time zone differences, cultural challenges, and technology were some of the biggest obstacles firms face.

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Popular Options

Our poll revealed that CPA firms of all sizes utilize outsourcing and offshoring solutions across various service lines and for internal administrative functions. 56% of our respondents currently use either one or both solutions. Furthermore, the majority used a third-party vendor or agency, meaning that the outsourced staff were not employees or contractors of the firm. However, bigger firms (>$50M) did use contractors (of their firm) more than smaller firms. Of the third-party vendors used, these were some of the most popular:

• Xpitax
• Makosi
• TOA Global
• Entigrity
• Alliant

Plentiful (and Profitable) Benefits

Firms leveraging outsourcing and offshoring resources are experiencing significant operational efficiencies and cost savings. They are able to access skilled professionals at a fraction of the traditional labor cost, leading to increased profitability. Additionally, this approach allows domestic professionals to offload time-consuming, routine tasks such as data entry, bookkeeping, and simple tax preparation, enabling them to focus on higher-value, more intriguing services like advisory and complex tax planning.

Firms reported that these additional team members typically work during their local time zones, which provides firms with extended operational hours and helps reduce the workload compression that many accounting professionals in the US face during busy seasons. For example, an offshore staff located in the Philippines may start their day at 8 am, when that would be 6 pm in US Central Time.

Challenges Remain

Despite the benefits some firms are experiencing, challenges remain. Training was the top challenge noted by firms. Among respondents who found training challenging, key obstacles included the extended onboarding process for offshore staff due to the additional time required to bring these new team members up to speed, and complications finding time for domestic employees to train the offshore staff due to time zone differences.

Technology-specific challenges noted by some firms revolved around access management (e.g., having to limit access rights within various software applications or local network drives), thus limiting the tasks these offshore staff could complete. One perceived challenge that didn’t rate as highly as others was getting clients to consent to their work being completed by outsourced or offshore staff.

Other challenges firms faced included:

• Offshore staff wanting to do more interesting work and be promoted, which is the type of work domestic staff want also
• High turnover
• Offshore staff are unable to perform certain tasks, such as going on-site to clients’ offices to perform inventory observations

What Should You Consider?

Firms who are considering outsourcing or offshoring should be diligent in their decision-making process to ensure this solution will make sense and provide enough benefit. Some key factors they should evaluate include:

1. Due Diligence of Vendors. If you’re interested in using a third-party vendor, make sure you do thorough vetting. This may include verifying the qualifications and experience of their staff members, inquiring about their data security and confidentiality measures, reviewing technological proficiency of staff, and understanding any legal and compliance implications.
2. Cost-Benefit Analysis. Make sure to compare all costs involved, including staff compensation/benefits, training, additional time required to manage these staff by your domestic staff, and any possible productivity differences that could emerge.
3. Technology Infrastructure. Ensure that you have your technology ducks in a row. Think of software (both collaborative programs like Teams, Zoom, etc., as well as your accounting programs), access rights and restrictions, and any additional data security measures needed to allow for a seamless experience.
4. Communication and Cultural Differences. Do your research to understand any language or cultural differences (i.e. national holidays) that might be prevalent in the countries where your outsourced or offshore employees are living. Invest in cultural sensitivity training for your entire team (both onshore and offshore) to reduce the chances of team members offending others unintentionally.
5. Training and Integration. Develop comprehensive onboarding and training programs that include detailed processes and procedures. Plan for additional training time to ensure these staff get acclimated to your firm’s standards. Foster a collaborative and inclusive environment that treats all staff the same regardless of location/work arrangement by including all team members in team meetings and trainings and any virtual teambuilding events you have.

While early adopters have identified potential benefits and challenges, the long-term effectiveness of these strategies will become clearer over time. Firms must remain adaptable, carefully weighing the potential advantages of global talent integration against the complexities of cross-border professional collaboration. Only through continued assessment, refinement of practices, and a measured approach will firms determine whether these resources truly deliver the operational efficiencies and quality work that firms seek.