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Rising Star
I’m conflicted. They are nice people but it takes away from my staff learning and things are usually wrong.
If you run a business, you will look for similar cost saving strategy.
Said this in another thread, but if you outsource, that comes at the expense of developing the folks here (in the US). The work may be "low value" at times, but those are practice opportunities that build the basics and foundation for higher value work. I always said, how do you review something you never prepared before? You won't know what to look for. Boggles my mind.
Comments about wfh are clueless and baseless. We’ve all had the internet and phones for many years. The overall percentage of staff has gotten younger in the past 20-30 years and only a small portion of managers and above have meaningful face to face interaction with economic buyers at the client- obviously there are exceptions, but don’t flatter yourself that anyone cares you aren’t at the office as long as you get the work done.
The key argument against outsourcing is an damage to the brand. If the perception is that the firm just outsourced to India or even Tampa it will make it harder to convince clients we are best in class.
You get what you pay for..
I like that model AC straight to manger 😂
It sucks but it’s business. I was at my firm during the implementation and a year after it of outsourcing and the impact was terrible. It was supposed to free up time for local teams in redundant work to prioritize high risk areas and lower/manage local hours worked. What actually happened was: outsource everything you legally can at the expense of local staff development and pick up more clients. This resulted in even more hours of work cause now you’re managing more clients than normal and managing offshore communications. All this really did was improve profit margins for partners.
Great for data entry and simple work, as well as giving entry levels a chance to review others work. We should definitely be able to choose like 1 engagement per staff where they work on certain areas to ensure they have a proper understanding of those areas, but they don't need to do the work on every audit. So in summation, I'm fine outsourcing almost everything at a lower level as long as we intentionally cc staff and send them certain simple tasks sometimes as well.
This goes against the type a mindset of b4, but it’s also about being in practice areas that are harder to outsource as opposed to getting “better”. Niche practice areas and functions that lend themselves to a US presence have a built in bar to this type of issue. Many clients require only US citizens work with their data and similar restrictions.
Pro
Phase 1: Outsource from US to India
Phase 2: Outsource from India to Robots 🤖
Phase 3: Nobody has any jobs 🤷♂️
If this fattens’s partners wallets then so be it. We work to make them richer!!
1. This is not a new concept to hold down our salaries to bulk up owner pockets.
2. People don’t want to do mundane data entry oriented jobs that can be automated. There is significant upside to having an offshore team who can work overnight while you sleep to keep your product moving.
3. I never prepared and it allowed me to accelerate my career much faster by learning issue identification than my peers who prepped for 3+ years.
EY 5- you are missing the point of the post
I am reflecting on the early stages of my career and pointing out that there are diverse paths to advancement in this industry. We do not all have to follow the same exact path in order to be successful.
This method just simply means managers, partners, and seniors would be teaching associates how to review instead of how to prep. It is a skill set that is being taught to seniors and managers anyway, the question is how early do you introduce it in someone’s career.
Anything u do in usa if can be done in Asia, you better expect lower salary.
Just like most Americans prefer buying made in China/Asia cheaper cars, electronics or products our clients prefer to pay lower if same education/experience is available in Asia. If u want to avoid being stuck in lowering salaries, do something which has entry barrier and someone in Asia can’t do it. Example surgeon, firefighter, bus driver.
I can add stripper to the list. That job is safe from outsourcing compared to tax compliance jobs.
A lot of great posts here. The common theme here is to not have a job/responsibilities that could be outsourced. I’d argue that just about everything besides having relationships with the client can be outsourced. High quality review, research, judgement calls. Why can’t someone with 15 years experience from Argentina or India make those calls/reviews any better than someone with the experience here?
Having one on one meetings/dinners/happy hours are things that can’t be outsourced of course. But hey the client might not care about any of those things if their audit fee could be half of what it is right now. Or the client might be 90% outsourced as well...
Manager 1, in IT already india has cut out US management. Large Indian IT consulting firms directly work with US clients. You will see similarly large tax and audit teams in india directly work with US clients whose accounting team will be in india.
The concept is called labor arbitrage and it’s been around a long time. Accounting is not exempt. It’s very common in IT functions and in legal.
In the case of legal outsourcing there has been some retreat in recent years in part because of lawsuits that questioned whether foreign trained reviewers could be billed as having done review, but the practice still persists. On top of this push to move work to gig style contract attorneys in the US is a practice that some big 4 are actively involved with. It’s an awful trend that has seriously damaged the overall legal profession for greater profits for a small set of already very wealthy partners.
Solutions are limited in a competitive market. Stricter professional rules and restrictions around licensing and who can sign off on work are a start though.
What are your thoughts on ratio requirements? ie; any business engaged in services that relate to IRS/SEC reporting must not exceed more than 1.5 foreign employees per 1 US employee or something similar? It is getting out of hand now with US teams comprising 20-25% of large engagement teams in many cases
This is an interesting conversation. I think it’s worth pointing out that outsourcing isn’t just happening in public accounting. I’ve had multiple large corporation audit clients where all of the staff accountants are outsourced. They prepare the JEs and reconciliations and senior or manager at HQ reviews it. So they face the same issues in that those senior and manager levels could eventually be outsourced as well. The difference to me is that the outsourced roles at these companies actually seem to be well training and produce high quality work.
The outsourcing that accounting firms do is completely the wrong model compared to the way law firms handle “outsourcing”. For some reason big4 wants to outsource everything without understanding they should be outsourcing the useless, non substantive work that needs to be done. Firms do not have attorneys do admin. Staff do not do substantive work. This is the line that makes the most sense here too.
PwC7- this is very fair and consistent with my experiences.
What are those off shore people going to do when data analytics allows us to review entire populations? When sample sizes start to slim down cause the big stuff is taken care of and the judgmental/risky stuff is left, won’t that need to be done on-shore?
A partner has told me that offshore is a placeholder for technology - whether or not that’s true or the timing is TBD..
Rising Star
If this continues to become pervasive throughout the business world, politicians are going to take action to curb it
It’s not a good look when you have wealth inequality continuing to increase while white collar, “good” jobs continue to be sent overseas and outsourced.
Also becomes a question of “how much money is enough?” It would be nice if some of these business executives broadened their perspective outside maximizing profit
M2 Politicians will never take action to fix this issue. Haven’t they made it clear that every time the interests of big business are at odds with the interests of the American worker, big business and the donor class win every time. Even if this issue made its way Into a politicians platform it would be all talk and no action. Even if legislation was passed to address outsourcing these jobs, it is lawyers who write the legislation and you can bet they will find a way to allow professional service firms to continue the practice. American labor will continue to lose until there’s a true populist movement in this country. Our oligarchy promotes division constantly to keep the people from uniting to advocate for the interests of working people
I’m in tax, and think I’m somewhat safe for the foreseeable future. Tax law is complex and changes from time to time...so there is a demand for good “tax people” I guess.
Can’t say the same for bookkeepers though. I met a CPA that worked with Asian businesses. They have their bookkeeping outsourced to China for $3 an hour.
Ok, thank you for your input
Have you seen the quality. I think it’s great for data entry and a first level review.
My firm does not outsource, so question for you all. Is there ever any issues for outsourced labor with IFRS vs GAAP understanding? Do you think this could lead to the convergence of the two?
My overseas teams are amazing on US audits. We aren’t just sending it into a black hole and hoping it comes back without problems.
We have a dedicated team that is assigned to the account for years. They basically mirror our US team and develop and grow with us. We connect almost daily.