Decoding the Big 4 Offshore Services

By Jagrit Gupta | 6 min read

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Shared Services Centre

Part 2: Decoding the Big-4 Offshore Services in India

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.

About SPC Group India :

Operating for over 70 years, SPC Group is a technology-focused accounting and advisory firm. Consistently ranked amongst the top Accounting firms in India, SPC is an Indian member form of PrimeGlobal- An award-winning association of independent accounting firms, comprised of approximately 300 highly successful independent public accounting firms in over 90 countries.

DECODING THE 'BIG 4' OFFSHORE SERVICES MODEL BETWEEN INDIA & USA

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.

Global Outsourcing Market

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.

Global Companies are outsourcing to India

Perhaps as much as 10 percent of U.S. audit work is presently done in India up from an estimated 3 to 4 percent about ten years ago when the firms launched offshoring pilot projects.

Attracted by wage savings and Indians’ command over English language, the U.S. arms of the Big Four have opened offices or joint ventures in India and hired thousands of local workers to do a range of tasks, including tax, consulting and audit work. The work performed at these delivery centres is limited to specified standardized tasks, none of which involves auditor judgment, and is reviewed and supervised by U.S. firm employees.

PwC SDC about 5 percent of its U.S. corporate audit work is conducted at alternate delivery centres, located outside the United States. PwC’s goal is to send about 20 percent of audit work to the delivery centers.

Offshoring in US auditing industries

Deloitte’s USI offshore audit staff in India receive training consistent with their U.S.colleagues, and their work is reviewed and supervised by professionals in the United States.


KPMG’s KGS offshore centres in India handle audit, tax and advisory work giving the firm’s clients low-cost access to a digitized, smart and affordable talent.

 

The Big Four started offshoring work to India about a decade ago, at first primarily to prepare tax returns; Today, their India KPO centres together employ over 30,000 people
in India for offshore operations, mostly in tax and consulting. No country hosts more U.S. auditing work than India.

 

No audit failures have been traced to offshore work there, and audit work done in India is routinely sent back to the United States where the PCAOB can review it. There is no formal agreement on offshoring with India, which allows the PCAOB unfettered access to inspect audit firms. The PCAOB’s Indian counterpart, the Institute of Chartered Accountants of India (ICAI), has no oversight of the Indian offshore centres doing audit work on U.S. companies’ books. Like other U.S. companies, audit firms are not required by law to publicly disclose offshore hiring. Audit firms may disclose offshoring in engagement letters – essentially contracts with their clients – but those letters are private.

PCAOB Deputy Chief Auditor Greg Scates mentioned to Reuters in 2012:

“There are no standards that limit what you can do in the area of Indian offshoring”.

Pros of Offshoring in india

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