UK accounting industry known for having one of the highest concentration of accountancy professionals in the world is trying to do whatever it takes to shift the impact of covid to neutral. Industry revenue is picking up compared to the previous year as economic conditions improve.
With increasing demand, accounting firms are looking for Accounts Outsourcing to India that offer a wider range of pool access to the talent, hassle-free deliveries to clients, faster TAT and so on.
With the current covid scenario, It is important to understand how outsourcing accounting will help accounting firms to grow. Why UK accountants are looking for Indian talent? What are the profit margins which any accounting firm can unlock?
Sustainable growth for Accountancy Practices
With improving situations and businesses are coming back on track, it is a great opportunity for accounting firms to scale up and expand.
The accounting firms that use outsourcing attribute their ability to grow to outsourcing. It enables them to bring on more customers, it’s been fundamental to where they have got to as a business because practice owners know they can take the extra work on.
Some accounting firms outsource parts of their workload to ease the burden on in-house teams and utilize outsourcing to the fullest in busy seasons.
In the post-pandemic environment when firms are looking to grow their business, expand the line of services and provide more value to their clients, outsourcing is the key to success.
Is now the right time for Accounts Outsourcing to India?
Staffing Challenges: With the UK accounting scenario where the pandemic is impacting the work process, not many companies are willing to hire the new talent because hiring a new talent requires a lot of resources like training, providing infrastructure for work, upskilling etc. Also, the average recruitment cost in the UK to hire an employee is £3,000. Now when it comes to Accounts outsourcing to India, firms do not need to worry about the recruitment cost and other factors include training, scaling up staff and so on and when it can be combined with the lower rates, outsourcing becomes an important part of growth strategy.
Client value Proposition: Expanding horizon by acquiring more clients is the end goal for any accounting firm. With the latest situation, more accounting work is coming as businesses are back on track but including all the clients in the process can be quite tricky. With outsourcing, where accountants only have to focus on clients, the work is handled completely by the outsource team.
If you are looking or ever look for an outsourcing provider, we have created a partner checklist that talks about the vendor selection criteria.
Profit margin reboot
Outsourcing has always been considered a measure to reboot the existing profit margins. It is not wrong to say that profit margins are one of the biggest motivations why accounting firms are choosing outsourcing in the current environment. Taking it as a business strategy, cost advantage can help in rebuilding the client experience, drive revenue to the pocket and save money.
But How does India manage to provide experienced accountants at relatively lower prices?
Game of margin
Let’s assume that your accounting firm is making a steady revenue and you are exploring opportunities to grow. In that, you will think to expand your work by adding more clients and adding clients means need more resources. By hiring more accountants and tax experts, you can generate more profit but with different price range with these 2 scenarios:
- You hire local accountants in UK: According to the Reed.co.uk, an average accountant’s salary in the UK is £31,496. So if you hire 5 more accountants, the cost would be £150k per year with some additional costs like setting an infrastructure and employee benefits.
- If you hire 5 accountants from the accounts outsourcing to India, You can easily save more than 50% in overall cost. That’s significant keeping in mind the quality levels remain the same.
So with numbers, we can say that outsourcing does not only help cut down the cost by 50% but also give the same amount of quality work and more stability.
According to Glassdoor, the average salary of the accountant in India is £5445 per year and the average accountant salary in the UK is £31,496. With lower living costs compared to the UK, the difference in salary has been huge.
If UK accounting firms choose to outsource accounts and hire Indian talent, the profit margin will not only be increasing but also get a faster turnaround time for delivery. Also, recruiting from the accessible pool of talent to get highly skilled accountants for work is one of the reasons why accounting firms are choosing outsourcing.
With the combination of Brexit and covid-19, The scarcity of talent has increased due to the exodus of foreign workers. According to The Guardian, 1.3 million foreign workers have left the country in the last year. Also, it drives up the wages, in some cases to double. With all these situations, it becomes very hard for the UK accounting industry to keep up with the local talent shortage at a higher cost. In India, with millions of accountants graduate every year, there is no shortage of supply within the range of services firms expect matched with the UK standard.
Wrap it up
Outsourcing is not a secret sauce anymore to the accounting firms and it is the most sustainable solution to opt in to get the maximum benefit in the current situation.
To learn more about our Accounting Outsourcing services for UK practice, get in touch with our experts to understand how you can reap the benefits of our CoSourcing model.