How will offshoring affect UK accountants?

Offshoring refers to the transfer of a business process to another country regardless of whether the work stays within the same corporation or not. (OECD, 2006) This has become a popular topic in recent years with a number of jobs being offshored to countries such as India, particularly call centre jobs. However, it is the IT boom in India which has led to a fear that even relatively high-skilled, well-paid jobs are now also under threat (OECD, 2006) and so as a fourth year accounting student it is necessary to consider how offshoring will affect UK accountants, if at all.

It has been claimed that “anything which does not involve customer face-to-face relations can and will be offshored.” (Gupta, A., 2007) This would imply that UK accountants could be greatly affected by offshoring because sectors such as taxation and accounts preparation do not require personal contact with the customer and so could easily be offshored. However, given this opinion it is likely that not all accountants would be affected equally because auditing, for example, requires not only interaction with the client but it is also necessary to visit their premises and so it is difficult to see how such a job could be offshored successfully. The fact that cultural issues are also now less important (Friedman, T.L., 2005) would appear to strengthen the argument that anything which does not require close contact could be offshored because it suggests that companies now place less significance on their accounting and financial work being carried out locally; with global accounting standards in the place the work can be carried out to the same standard elsewhere whilst saving money.

Furthermore, the fact that accountants make use of software packages such as SAGE for basic accountancy work means that this type of work is eminently suitable for offshoring (O’Donnell, A., 2007) as the work is mainly computer based and can therefore be standardised. This is further supported by the view that the jobs most at risk are financial, insurance or computer based work (OECD, 2006) because basic accounts preparation falls into two of these categories and so it is possible that offshoring could have a major affect on UK accountants.

By considering the current position of offshoring within the accountancy profession it is again possible to reach the conclusion that this could affect, and already is affecting, UK accountants. There is now an onus on UK accountants to compete with lower cost professionals across the world which is a relatively new concept for accountants to comprehend because they are accustomed to being in the fortunate position of being protected from competition in many areas due to the need for professional qualifications to carry out certain tasks i.e audits. The fact that India, for example, has a generous supply of Chartered Accountants means that work can be carried out to the same high standard but for a much lower price and in modern society that is a major bonus for businesses. UK accountants must give this issue great consideration because Prudential already have 200 staff in Bombay delivering financial accounting and it is predicted that all accounts and actuarial work will be offshored (Accountancy Age, 2007), the NHS is planning to move 2/3 of accounting and finance jobs to India (Industry Focus, 2007) and many SMEs have also decided to offshore. (Sharma, K., 2007)

It is therefore clear that UK accountants cannot be complacent because offshoring will undoubtedly affect them as many accounts and finance jobs have already been offshored and it is likely that this trend will continue due to the high skills levels and low costs available abroad. However, not all affects will necessarily be negative and it is necessary to consider the opportunities which offshoring will provide to UK accountants.

The UK accountancy firms can act as the ‘front office’ that interacts with clients whilst the work can be carried out by cost efficient Indian CAs. This allows costs to be reduced so UK firms can offer competitive services to their clients therefore discouraging companies from independently offshoring accountancy work. (O’Donnell, A., 2007) The time difference is another factor which provides opportunities because it allows work to be completed overnight (O’Donnell, A., 2007) and this will add to efficiency and customer satisfaction and therefore provide the opportunity for more work to be won. Furthermore, the fact that the work can be carried out more efficiently and for a lower cost will lead to a higher profit margin (O’Donnell, A., 2007) within UK accounting firms and this will allow UK accountants to fund additional services to their clients. It is therefore apparent that UK accountants can reap benefits from offshoring if they are willing to think outside the box and consider the opportunities it presents.

In conclusion, offshoring will undoubtedly affect UK accountants but it is up to them to make the most of this situation. It is highly likely that jobs will be transferred abroad but not all of the affects need be negative. UK accountants can use this to their advantage by allowing certain work to be carried out abroad at a much lower cost allowing them to focus on providing additional support and services to their clients.



REFERENCES
Accountancy Age, April 2007
Gupta, A., 2007
Industry Focus, February 2007
O’Donnell, A., ‘A Challenging Environment for UK Accountancy Firms’, 2007
OECD, ‘The share of employment potentially affected by offshoring’, 2006
Sharma, K., SME Outsourcing, 2007