Outsourcing Accounting – The Beneficial Outsourcing Service For Your Business

If you are experiencing an amount of losses in your business because of an accounting system that is not efficient, then it is time for you to consider going for accounting outsourcing. This could be the simplest move that you can make to cut back on the losses of your business so, you can focus on growing your business again. In the world of business nowadays, there are many wise entrepreneurs that have turned to life-saving assistance that come from outsourcing companies and accounting outsourcing is one of the services that they usually make use of. This way, they are able to save on their business expenses, thus enhancing the financial situation of their organization.

The Benefits That Come with Accounting Outsourcing

The seemingly endless fame of outsourcing has effected to outsourcing firms being the most ideal life-savers now when it comes to businesses handling work that are beyond their capabilities to handle. As most outsourcing firms, especially those handling accounting outsourcing, offer their services on the Internet, many business owners see going to them as a time-saving venture. With hiring these firms, they won’t have to have some of their staff run around town to handle all the messy tasks that deal with the accounting processes of their businesses. The services that accounting outsourcing has brought to businesses has now become the best way to get rid of all the tensions and worries that are always emerging in the accounting departments of companies.

By giving all the accounting tasks to outsourcing firms, businesses are able to get more efficient and cost-effective service when it comes to handling all the accounting processes of their organizations. As such, their personnel are able to focus more on meeting the needs of clients and on improving all the systems that could move the business forward. By going for outsourcing accounting, the energy, time, and money of an entrepreneur are expended in the more important matters of the business. This is especially crucial for those business owners, who are on the losing side, because this will help them gain back the profits they need to get their businesses back on track.

Things to Watch Out for in Going for Accounting Outsourcing

However, in every endeavor, there are certain things to watch out for and the same is true when it comes to going for outsourcing accounting. A business owner should see to the proficiency and authenticity of the outsourcing firm that he has chosen to provide accounting outsourcing for him.  This is because he may have to share with this firm documents and data that should remain confidential like reports pertaining to company accounts and sheets for tax evaluation.

So it is best that before choosing a firm to outsource accounting for your business, you should see to it that they are reliable, sincere and have security measures in place to protect the identity and data of your company. There are now outsourcing firms that will handle all accounting tasks needed in your business like filing the daily or weekly progress chart of your finances and maintaining the transaction records on a daily basis, among others.

Key Points For Outsourcing Agreements (For a Start-up)

If you are a start-up company considering to outsource to an offshore partner, there are couple of points to bear in mind when drafting the outsourcing agreement. This article highlights few of the clauses which should be critically reviewed.

In general, the outsourcing agreements are very standard. But the catch is that most of them are drafted for a large established company environment where some peripheral work is outsourced. A start-up environment is radically different and so is the build-operate-transfer (aka BOT) based outsourcing model, which a start-up should use.
The unique needs of a start-up require some special care while working out the outsourcing agreement. Here are key points to bear in mind:

1. Hiring Procedures
As a start-up you need top-notch talent with good domain expertise. You simply can’t afford to get people on board and train them. The agreement must have a hiring clause wherein every member identified for your team is made to take your qualification test (if you have one), can be interviewed by you and only when you approve, he/she becomes part of your off-shore team. Don’t accept sharing of resumes alone. This can be very misleading.

2. IPR Protection
Intellectual property and confidential information protection is of paramount importance in start-up environment. Ensure that the outsourcing agreement has a clause wherein all inventions, discoveries or algorithms developed by your off-shore team are YOUR sole-property and the outsourcing partner has no claim on the same (not even in residual IPR). If as a start-up you have a standard employment agreement, ensure that the same (or suitably modified copy) is signed by each and every member of your off-shore team.

3. Employee performance
Every individual in a start-up should be very effective and high performer. This is even more crucial when running an off-shore team which can not be supervised by you in person on a daily basis. Ensure that the outsourcing agreement has strict performance criterion identified and clearly spell out the notice period within which your outsourcing partner should get a replacement for a non-performing individual. If the outsourcing partner has a performance improvement plan, review the same critically. If required, capture clear reporting mechanisms like daily or weekly status update reports, fortnightly call etc.

4. Authorized Transfer
As a start-up, you should outsource early so as to ramp-up resources at a relatively lower cost. But what if you are truly successful? What if you are the next Google? Would you still want to continue to outsource core R&D, which is your competitive edge? The answer is a clear NO. If you are successful, it’s best to set-up your own off-shore design center and keep all the know-how internal. To make this transition smooth, you must insist on a transfer clause in the outsourcing agreement which authorizes you (as a start-up) to transfer the complete off-shore team from your outsourcing partner to your direct subsidiary, as and when the latter is set-up.

If there is no such clause, you will have to hire fresh talent for the direct subsidiary and all the know-how with the off-shore team will be lost. This can be very painful and will lead to substantial delay in making the direct subsidiary effective.

Trends in Outsourcing

Although outsourcing is not a newly introduced phenomenon it is as old as human kind itself and during this last decade or so it has become more of a mainstream method of employment and business.

Outsourcing traces back to different eras and periods of the business and industrial evolution, concerning different sectors. However historians agree that the latest and largest wave of outsourcing trend came with the revolution of IT technology and the need of manufacturing hi-tech items, including computers and electronic equipment. One of the most crucial moments in the history and evolution of outsourcing services was the dot com boom and the significant increase of e-commerce possibilities. In present times there is practically nothing that cannot be outsourced, with BPO expanding in fields like IT and ITES outsourcing, security, monitoring, administration and even commerce.

Analysts claim that in a few years outsourcing will be the focal point of all IT and online businesses, mostly because nowadays companies can benefit from skilled and experienced personnel that come from all over the world at low cost. Especially since a vast majority of outsourcers come from countries like India and China, or other Asian countries where wages are lower than in the US and the developed Western Countries, the possibility of quality contractors with low rates is increasing dramatically every year. Although the initial predictions were talking about a decrease in outsourcing in 2006, in both 2006 and 2007 the number of outsource contracts was not only bigger but also the fields of activity were more varied than in all the previous decades. The current trend in outsourcing shows that the outsource providers expand their technological scope and ensure their position in global market, while the elevated number of buyers help in the creation of new outsourcing workplaces.

Since outsourcing now is broadening its horizons to different markets taking advantage of the latest technological inventions, there are no geographical or language limits. Video conferences, instant messaging, networking groups, emails, mobile technology and social networks have facilitated the communication and work of outsourcers with the hiring companies who can now focus on the core business operations of their companies. During these last five years we saw the Western companies going offshore when it comes to outsourcers, not only because of the lower prices but also because of having access to a pool of talented and competitive freelancers, ranging from high skilled professionals to ambitious and qualified graduates who could perform equally well maybe even better.

The future of outsourcing is now considered bright and open, although everyone agrees that the main focus now will be on increasing competition and the orientation of business to processes more than before.