Almost all leading accountancy firms in the UK engage in outsourcing. The practice has been widely successful for these firms, and this trend doesn’t look like it’s about to slow down any time soon. How and why is this type of partnership with offshore accountancy firms so effective and profitable for accountancy firms in the UK?
Firstly, accountancy firms in the UK invest in outsourcing because they want to stay competitive. In a recent survey including the top accountancy firms in the UK, 64% stated they are expecting to outsource vital responsibilities to maintain a competitive edge in the UK’s cutthroat accounting industry.
67% of the firms stated they plan to outsource “high-value services” as they couldn’t offer these services on their own. Bear in mind – the survey outlined the views of over a hundred decision-makers in the UK’s leading accounting firms. Even though most of the participants’ (72%) agreed that outsourcing is still considered to be a taboo in the industry, the financial upsides to outsourcing are too big to avoid.
Financial Benefits of Outsourcing
Even for the most well-funded accountancy firms in the UK, hiring in-house accountants are extremely expensive. It’s a process that involves multiple costs, including:
On average, a Senior Accountant commands a salary of £34,357 in the UK. Plus, there are added fees that recruitment agencies charge (approximately 20% of the final salary). These added costs on top of hassles such as screening, interviewing, onboarding. Make the idea of recruiting new accountants a nightmare for most small-scale accountancy firms in the UK. Outsourcing doesn’t involve these costs!
Newly hired accountants need to get accustomed to the type of work their accountancy firm does. In the UK’s accounting industry, time is money. The decision-makers in the UK’s top accounting firms would rather spend their time approaching new clients or working on existing projects. Training first-year students are the last thing these accounting experts want to do. By teaming up with the best Accounting Outsourcing Firms, these firms receive specialists and seasoned accountants who are trained to carry out complicated accounting tasks. These experts are hired on the basis of their understanding of the UK’s accounting standards. So, they’re ready for work once they come on board.
Unlike in-house accountants, offshore experts don’t drive up office space costs, onboarding costs, etc. They don’t need furniture, workstations, private office spaces, or parking spaces. They have their own equipment which the accountancy firm in the UK doesn’t have to pay for. By outsourcing, small-scale accountancy firms in the UK can save approximately £6,000 to £7,000 per year.
Small-scale accountancy firms in the UK have a limited number of managers. Upon hiring in-house staff members, they have to:
- Set clear deadlines and schedules. On average, an in-house accountant in the UK works 260 days a year. That’s far less than what offshore accountants offer.
- Develop and train their in-house accountants, ensuring their progress isn’t hindered. Or else, retaining them becomes a massive problem for small-scale accountancy firms in the UK.
- Plan and provide yearly appraisals.
- Provide constant feedback on their progress.
- Provide them with Employer National Insurance
- Contribute to their auto-enrolment pension
- Set up employers’ liability insurance
- Allocate for holiday payments
- Account for sick or maternity leaves
- Provide them with coffee, toilet paper, electricity, and other basic amenities.
These management processes take up at least a week worth of output every year for accountancy firm managers and they and include a plethora of costs. These costs and time-related issues are often too much to handle for small-scale accountancy firms in the UK. By outsourcing accounting responsibilities, they can diminish and even eradicate most of these efforts and costs.
Understanding the Lure of Offshore Accountants
The best outsourcing experts offer free trials. While larger firms can afford to take hits, for small-scale accountancy firms in the UK, free trials mean an opportunity to test the efficiency of the offshore experts.
These firms can pick and choose during these trials. They aren’t compelled to sign contracts right off the bat. After testing the quality of these offshore experts, they have these pricing models to choose from:
Pay as You Go
Most leading outsourcing accountancy firms charge on an hourly basis. Typically, the costs range from £10 per hour to £20 per hour. Small-scale accountancy firms in the UK have dedicated accountancy experts working for them at pre-determined rates for a fixed number of hours.
Many small-scale accountancy firms in the UK don’t have too much work throughout the year. So, signing up for the ‘pay as you go’ model is really beneficial for them.
If the volume of work suddenly increases, they can hire dedicated employees at fixed monthly rates. Typically, these offshore experts charge anywhere between £1000 per month to £3000 per month. The more experienced the offshore accountant, the higher he or she will charge.
In the hourly model, small-scale accountancy firms in the UK have the option to purchase a fixed number of hours (e.g. 300 hours for £3000). This payment model entitles these firms to large discounts.
All of these financial and practical factors combine to make outsourcing an irresistible option for both small and large-scale accountancy firms in the UK!