The COVID-19 crisis has turned the UK’s accountancy industry upside down. Many small-scale firms are aiming to navigate the pandemic-triggered crisis without redundancies.
But many are failing to do so. The accountancy firms that are staying afloat and making the most of the few opportunities presented by the pandemic, all have offshore support. Outsourcing isn’t just a means of cutting costs for these large accountancy firms – it’s the business tactic that’s helping them during this crisis.
Understanding the Crisis in the UK’s Accountancy Industry
To understand how badly the UK’s accounting industry has been hurt, we just need to look at the four major players in the industry – Deloitte, EY, KPMG, and PwC, Deloitte have all cut down the amount of revenue they distribute monthly to their partners by 20-25%. EY is also cutting the salaries of its employees by 20%.
Bear in mind – these companies all have offshore help. They have multiple branches across the world, and even they are struggling to maintain financial stability during these uncertain times. Imagine the plight of the small-scale accountancy firms with no offshore help!
The pandemic has proved that developing and maintaining a wide range of skills is vital for all accountancy firms in the UK, irrespective of their size. The crisis has heightened the levels of competition, and the organizations that have support from their offshore accountancy experts are better equipped to battle such unexpected crises.
Is Outsourcing the New Normal?
Multinational accountancy firms, the ones that started the trend of outsourcing, have unintentionally intensified the competition amongst small-scale accountancy firms in the UK. Different industry factors affect the level of competition in different ways. For instance, the accountancy firms with the best information and communication technology infrastructure are better equipped to outsource.
Once these accountancy firms start engaging with offshore experts, it’s easier for them to compete globally. Over the years, the accountancy firms in the UK that have traversed these cross-country roads have been able to develop specific strategies regarding offshoring, nearshoring, and onshoring. These strategies add amazing flexibility to accountancy firms.
They are granted access to highly experienced providers of accounting services at significantly lower costs. Since these firms only pay for the services/resources they need separately, they get certain tasks done at much cheaper costs without having to worry about HR costs, training costs, office space, etc. Outsourcing in the UK’s accountancy industry has been very common for many decades. The ongoing crises are simply highlighting the advantages that accountancy firms with outsourcing partners have over firms that don’t.
One of the common misbeliefs about outsourcing accounting responsibilities is that accountancy firms in the UK lose control. Is a loss of control the tradeoff for getting super-efficient accountants at cost-effective rates? Absolutely not! The engagement models offered by some of the best offshore accountancy experts ensure that the ball always stays in the court of the hiring accountancy firm.
For instance, cost reduction in this a pandemic-induced global recession is the key motivation for accountancy firms in the UK to invest in outsourcing. In 2016, cost reduction wasn’t even in the top five motivations behind outsourcing. The practice of outsourcing is so flexible, that top accountancy firms in the UK engage in it only in ways that suit them. If expanding their scope of services was the key motivation, the firms practice outsourcing in a way that promotes the cultivation of new capabilities, both in-house and offshore. Currently, most accountancy firms in the UK are prioritizing cost reduction to address pandemic-triggered problems. In the future, they can change their priorities and even scale down their outsourcing efforts!
Plus, outsourcing retains key office functions for accountancy firms in the UK. Firm leaders have enough time to focus on vital business activities and make more informed management decisions. The fear of losing some of the control of the accountancy firm is normal. But, effective managers of outsourcing functions are always able to draft detailed contracts that limit the power of offshore experts. For instance, if the offshore accountant fails to deliver high-quality work, their contracts can be instantly terminated.
Accountancy firms in the UK have plenty of outsourcing experts to choose from. They can outsource different functions of their business as per situational needs. Even if some miscommunication issues start proving to be detrimental to the business, they can switch to hiring offshore experts on a part-time or a per-project basis.
Outsourcing is the Future
Companies that find accounting outsourcing firms are far more productive because they have a larger number of experts working together to generate profits for the firm.
In the past, outsourcing repetitive tasks or non-core responsibilities was very common. Nowadays, numerous offshore accountancy experts are managing core functions that their hiring firms don’t have the ability to manage in-house.
This pandemic has made many accountancy firms in the UK finally come to terms with the importance of outsourcing and how effective offshore experts are at working remotely.