Why outsourced accounting is growing fast

When we started Global Upside 15 years ago, outsourced accounting was a novelty. The idea of outsourcing manufacturing, research, and other functions was more common, but outsourcing HR and back office accounting and other professional services was relatively rare.


Today, according to a recent report by KPMG LLP and HfS Research, “State of the Outsourcing Industry 2013,” 23 percent of the survey respondents indicated they are outsourcing accounts payable processes, 19 percent purchasing and accounts receivable, and 11 percent recruiting and staffing. Another 40 percent say they plan on expanding outsourcing of financial services. The study is based on a survey of 1,355 business leaders. Outsourced accounting (and recruiting and staffing) is now an acceptable and increasingly attractive business practice. Here’s why.

The Right People
Some 70 percent of survey respondents said they are outsourcing accounting to get access to better talent. This rings true with our experience at Global Upside. Getting the best people on your team can be challenging, especially if finance is not your core business. Outsourcing to a BPO specialist focused on quality people provides instant access not just to one qualified individual, but also to a team with expertise in multiple disciplines. No long searches. No hours of interviews with candidates. No ongoing turnover, management, training, etc. Just reliable results as and when you need them.

The Best Work
Closely related to the demand for quality people is the demand for quality of work. Businesses choose to outsource accounting because they want assurances that the firm’s accounting will be accurate and compliant in every part of the business. This is especially true for, say, venture-backed startups that are busy with engineering and development. They are spending other people’s money and must answer to a board of directors. They need to accurately account for payroll, capital purchases, forecasting, employee benefits, and more. They need skills of a bookkeeper, accountant, controller, CFO, and similar skills in the HR function. Outsourcing enables this flexibility without adding any headcount.

The Best Technology
Another 64 percent of respondents in the KPMG report said they are outsourcing to get better technology and analytics. Instead of evaluating, testing, purchasing, deploying and training on internal systems, businesses are able to get the benefits of state-of-the-art business processes and achieve compliance by leveraging experienced experts. Again, this is especially valuable for smaller companies that cannot afford the financial and time investments associated with these system and building the necessary teams.

Built-in Scalability
When a company grows, back office support does not grow by itself. Typically, a part time or full time employee becomes overwhelmed and the company then tries to hire more resources. This takes time and focus from management, and can be a nagging distraction. Companies usually need to have access to many financial disciplines, and a single new hire is unlikely to have all the necessary skills and experience. Outsourcing with the right partner enables the kind of overnight scalability that can help a growing company meet all back office needs in a timely, cost-effective manner. The outsourcer also brings the right talent as and when it is required.

Clarity of Focus
We often run into entrepreneurs who are frustrated by accounting, HR, and other support services. These functions take an increasing amount of time and energy to administer, at the expense of other business issues. Outsourcing these functions puts them into the hands of people with the right expertise and experience, who deliver the appropriate reports and documentation, with less time required from company management. Just as a company might outsource production of its products because it does not want to build a factory, most companies don’t want or need to become experts at HR, financial management or accounting. They want to focus on growing the business.

These are the reasons outsourcing of finance, HR and other back office services is becoming more and more common. Companies can have a world-class accounting team and operations, and scale it on demand, without investing the time and pain involved in building that operation themselves.