Should companies in the UK outsource their finance & accounting functions to India?

CFOs, Finance Directors and Finance Managers in the UK looking to reduce costs and improve efficiency often face this question: should I outsource finance & accounting services? The question becomes a lot louder for companies that are facing a staffing shortage – it is not easy to find and retain qualified accountants in the UK.

Outsourcing as the obvious solution – why UK companies outsource today

In the face of staffing issues, outsourced accounting services look like a pretty attractive solution. While cost has been the major driver of accounting outsourcing over the last decade, skills shortages are a key consideration today. Businesses in the UK are also relying on mature offshore teams to drive forth their digitisation efforts. In addition, some finance & accounting BPO companies are also evolving to offer process reengineering, RPA and Artificial Intelligence solutions. These value additions – beyond the traditional expectation of cost savings – are the key drivers today.

We spoke with some of our clients to find out why they decided to outsource. The following are the key reasons why they felt it was a good idea to build an offshore F&A team in India:

1) Special expertise: Most of the staff working onshore in accounting departments often do not have the liberty to focus on just one function. This limits the possibility of specialisation. On the other hand, an outsourcing company will have a large staff specialising in specific functions and industries. In addition, they will also have optimisation platforms in place that streamline and speed up each process. Access to a dedicated team of accountants with this level of specialisation at cost effective rates is a strong reason for outsourcing.

2) Flexibility and scalability: One of the biggest benefits of building an offshore team in a country like India is access to a vast pool of qualified accountants. Established F&A and bookkeeping outsourcing companies have strong recruitment capabilities and tie-ups with universities, which allow them to hire a large number of top-notch accountants within short timeframes. This gives UK finance leaders the flexibility to ramp up resources at any given point in time.

Another advantage is that while the offshore team works as an extension of the client’s team, they are managed by the outsourcing partner. This means that a UK company doesn’t need to worry about sickness or other holidays their team members in India may take. The vendor will provide a holiday cover where needed and will ensure that the pending work is picked up by substitues in case of long absences. This gives the finance leaders in the UK a certainty that the team in India will continue to perform at full strength throughout the year.

3) Industry and legislative expertise: Offshore accounting teams gain industry expertise over time. For example, as a leading provider of accounting and payroll services to the recruitment industry, QX F&A has gained an in-depth understanding of HMRC rules and legislations that impact accounting. Our team understands the industry and helps clients to manage compliance. At the same time, the team has gained a thorough understanding of how the recruitment industry works. This allows us to deliver services that add tremendous value to the client’s process.

4) Support for digitisation and process improvements: It is difficult for accounting departments in the UK to find the bandwidth for major digitisation or process reengineering initiatives. Mature vendors already have processes in place and may already possess the experience needed for moving paper-based processes to digital platforms. Many UK businesses combine outsourcing with modernisation initiatives to kill two birds with one stone. The only challenge is to find a provider that is able to provide valuable assistance in these areas.

5) Focus on strategy and business growth: Offshore accounting providers have the people, processes and technology that make F&A functions more efficient and they have reporting mechanisms that provide better visibility on the activities at the same time. They also take care of compliance and shoulder the burden of other administrative tasks. As a result, accounting personnel in the UK are able to focus on delivering accurate management reporting and investor reports as they are freed from various daily accounting chores. This enables finance leaders to give full focus to industry trends and other areas that contribute to the overall business growth.

6) Reduced costs: While cost reductions should not be the only reason for outsourcing finance & accounting, it remains one of the primary drivers.. Businesses in the UK can get access to the best accountants, best practices and technology when they build a dedicated team in India. And most offshore companies will be able to deliver savings of 30-50% on the existing processing costs within a short period of time.