This one is a touchy subject for some. So before you get angry and send me hate mail open your mind to the possibilities…..
In 2014 there were approximately 50,000 Australian office jobs sent to the Philippines alone. According to experts this number is set to double this year and continue growing each year. It can be a touchy subject with some people but it’s not going to go away. Clothing has been manufactured overseas for years and now it’s office jobs. When the labor costs are 1/5th to a 10th of what we pay in Western countries it is a compelling opportunity for businesses to consider. There is also an abundance of people who are educated and very keen to work.
Although many Asian countries are offering outsourcing resources, I am most familiar with the Philippines market. There are approximately 1.2M people currently hired (in the offshoring/outsourcing space) and it is growing at 20% pa. They cannot build the office facilities fast enough to house them all. To become a qualified CPA it takes 5 years after university and you can hire them for around $4 – $7 per hour. This is considered a good salary.
When I first visited on an outsourcing study tour the following line got me: “any job that is done over the phone or behind a computer we can do for a 1/5th to a 10th of the cost.” So basically any non-customer facing role can be done cheaper and often better.
The use of cloud technology is critical to making this happen in accounting firms. Instead of sending large data files backwards and forwards, the offshore Accountants are working on the same file you are. If Accountants locally are not adding value to the work they are doing then their days are numbered.
The Accounting firm of the future will have local team members who are customer facing and adding value. Everything else will be done somewhere else. This is happening right now.
Many Accountants I have spoken with reject this reality because they still want to hire ‘locally.’ Hiring local people is a very noble thing to do. I do it but I do it for customer facing roles mainly. Many Accountants are worried what will happen to the profession if they don’t hire local graduates and train them. This is a good concern to have. It’s also a real one. If you are going to shift your processing team offshore then how are you going to train local talent to ‘come through the ranks’? The entire training model might need to be turned on its head as well.
The challenge you have got is other firms are doing this and they are using the significant cost savings as an advantage and they are reducing their prices. With a (up to) 80% cost reduction on labor costs the ones that are using offshore teams can hire more people and give a better service. They can do more marketing, create more products and give a better experience to their clients.
The biggest challenge you will have with this strategy is ‘selling it’ to your existing team members. They will feel their jobs are threatened. If you take the view it is a business growth strategy and not a redundancy strategy then that will help a lot.
You don’t have to go in ‘boots ‘n all’ and create your own full-time team from day one. You could start by hiring contractors on the various contractor websites to do one-off special projects.
In the not too distant future here’s what your offshore team could look like:
- Your internal finance team
- Marketing team – all functions
- Sales coordinators
- Client Services assistants
- Technology creation and support
- Accounting processing team
- Product & systems developers
If you are interested in this space then I strongly suggest you hop on a plane and go on a study tour (email me and I’ll send you details of reputable tour operators) so you can see it for yourself. As the tour operator (Mike) said to me:
‘Many people come over here with their current business or product in mind. Then they see the machine in action. When they leave they have invented new businesses and new product ideas’.
The machine is full of gas and is waiting to be started.