COVID 19 Realizations & Counter Strategies for Independent USA CPA Firms

By Karan Gupta | 6 min read

What's in the page

Part 1: India’s $150 Billion Offshore Journey with USA IT Firms through the 80s

The world has moved towards a shared economy leveraging technology and remote working capabilities. The COVID Pandemic has been debilitating for business, but this is the time to rethink and reorganize to plan for resilience, competitiveness, and profitability.

A. Off-shoring to India: Genesis and Business Rationale

Outsourcing of services to India started in the 1980s and rapidly accelerated in the ’90s. First, some global airlines began outsourcing their back-office work to India—and then IT companies followed. Some of the earliest players in the Indian outsourcing market were Texas Instruments, American Express, Swissair, British Airways and GE, who started captive units in India; today world’s largest companies have back-offices in India including McKinsey, Honeywell, Tesco, JP Morgan, , Deloitte, PwC, KPMG etc. Over the years, the industry has built robust processes to offer world class IT software and technology-related services.

Outsourcing has altered the foundations of global business practices. The two main reasons why companies outsource are to cut costs while being able to focus on core business. Now, with the increase in competition and emergence of new players on the scene, forerunning organizations rely on outsourcing as a strategic move, to get an edge on their competitors in price benchmarkingshore up margins on engagements and maintain an On-tap workforce (turn fixed costs into variable ones whilst simultaneously reducing the burden of managing, maintaining, and extending benefits to a large workforce). By contracting out non-essential processes to a third-party with proven expertise in the field, focus can be redirected to a company’s core activities so as not to interfere with growth in size and operations.

It is pertinent to note that companies often overlook the additional benefit of generating higher customer retention rates with a combination of innovative practices, intelligent and talented subject matter experts, and speedy execution.

B. India’s History & Attractiveness as a preferred offshore Destination:

A brief history of Indian business service providers shows how the nation has progressed within the global economy, from mainly data processing and data entry services offered, to high value consulting, development, design, virtualization and other top-notch convergent services.

Today, India dominates the global outsourcing market with a 67% share; valued at more than $150-billion, having a growth rate of 10-15% per year; has now become a support system for most of the software companies in the west. Over the last 30 years, India has put itself on the international business map by offering and scaling low-cost, low-end IT services to global enterprises. Immediately after 2000. India proves to be the most mature market for business process outsourcing, having set cornerstones in the history of outsourcing.

As per the A.T. Kearney’s 2019 Global Services Location Index – India is ranked one in terms of attractiveness for outsourcing. There are over 500 companies in India that are catering to the varying requirements of the western countries.

A.T. Kearney

As per a Deloitte study – Over 59% businesses are already outsourcing to India. Not just that, 22% of those that are not currently outsourcing to India are planning to do the same in the coming times.

Deloitte study

India is the leader in outsourcing worldwide, with 6 out of the top 10 outsourcing destinations, according to Tholons 2015 Top 100 Outsourcing Destinations (the organization has been tracking outsourcing destinations for over a decade).

India is the leader in outsourcing worldwide

C. Critical Success Factors

Human Capital: India has the second-largest, over 350 million, English-speaking people in the world, and ranks third in Asia on English proficiency, according to the EF English Proficiency Index. The engagement execution cost in India is 30-40% lower as compared to the US and Europe. While the blended average hourly cost of CPA professionals in India ranges from $20 – $40/hour, in comparison the cost in US comes $60 – $150/hour.

Time-Zone Difference: Additionally, outsourcing in India gives you an option to quickly time-to-market due to the advantages gained by time zone differences. The 12-hour time difference between India and the USA provides companies with numerous opportunities for work to be completed earlier than expected, leading to greater efficiency, increased productivity, and more time to focus on other crucial tasks The time zone difference makes India a great option for clients who wish to create a hub for parallel processing and data analysis to enable 24 hour client servicing.

Data Security & Privacy: India takes data security very seriously and the Data Protection Bill, 2019 was introduced by the Minister of Electronics and Information Technology in December 2019; Information Technology Act (2000) (“IT Act”) to include Section 43A and Section 72A, which give a right to compensation for improper disclosure of personal information.

D. CPA firms taking a leaf from the IT playbook for disruption

Since the last 5 years CPA firms are consciously making efforts to increase their revenue share in areas of Advisory, Technology solutions, and Consulting leading to shrinkage of focus traditional practices like accounting, tax and auditing. By contracting out testing and data entry processes to an offshore centre with demonstrated expertise in IFRS, SOX and SOC compliance as well as US GAAP, CPA firm’s focus can be redirected to emerging practice areas and facilitate growth in size and operations. Further, time consuming tasks such as sanitation of raw data in excel, PowerPoint presentations, data entry, checklist based testing, Transfer Pricing comparatives etc. can effectively and efficiently be managed externally with no extra risk to the business. In doing so, companies can turn fixed costs into variable ones whilst simultaneously reducing the burden of managing, maintaining, and extending benefits to a large workforce. Additionally, outsourced services provide a certain amount of flexibility in slow periods and economic downturns.

The IT industry may have possibly benefited half a Trillion USD in saving through the offshore model. It is time for CPA firms to evaluate a offshoring with a combination of innovative practices, intelligent and talented subject matter experts, and speedy execution to achieve remarkable upswing in client retention and business scale.

 

While many CPA firms may still believe that in order to see magic unfold within an organization, it is imperative that the talent is put under the same roof. The camaraderie and the sharing of ideas that can take place within the same environment cannot be done when the teams are oceans apart. The talent you hire in house is aware of your company policies and fit right into your corporate culture. Moreover, it is always easier to communicate with your teammates face to face than through some virtual channel. But all the above has drastically changed now – The COVID pandemic realization has sunk on many CPA firms and unlocked potential of remote working capabilities.

While many CPA firms may

Follow Us

Connect With Us

Thank you for your interest in SPC Group. Please click on the link below and fill in your details. Our Executive will call you in 2-3 Business Days.

Contact Us?

Doing Business in India

Something isn’t Clear?
Feel free to contact us on 01204516921.

We will be more than happy to answer all your queries.

Contact Us?

establishing Business in India

Something isn’t Clear?
Feel free to contact us on 01204516921.

We will be more than happy to answer all your queries.

Contact Us?

apply for jobs

Something isn’t Clear?
Feel free to contact us on 01204516921.

We will be more than happy to answer all your queries.

Contact Us?

SPC
alumni connect

Something isn’t Clear?
Feel free to contact us on 01204516921.

We will be more than happy to answer all of your questions.

Thankyou for contacting us!

Your form has been submitted successfully. We will contact you in 2-3 business days.