Considering outsourcing accounting or bookkeeping overseas?

By November 1, 2019 Accounting No Comments

I recently read Rich Dad Poor Dad by Robert Kiyosaki, a book widely considered to be the number #1 personal finance ‘bible’ of all time. In one chapter Kiyosaki poses the question: “How do you determine if you are an employee or an entrepreneur?” In his opinion, an ‘employee’ who wants to grow their business will aim to do so vertically (achieve growth, hire more staff and repeat) – but by contrast an ‘entrepreneur’ will work towards growing the business horizontally (achieve growth, outsource where possible and repeat).

While it’s not uncommon for the employee mindset to result in sustainable business growth, with the right processes and support in place the entrepreneur ‘method’ can be an extremely cost-effective way to operate a business – and achieve financial success in a relatively short space of time.

But when it’s not executed properly…? Well, that’s when business failure can occur.

What actually is ‘Outsourcing’?

Let’s go back to the start. Anyone who is not directly employed by your company but provides a key service for your business is an ‘outsourced’ provider. They may be located in the same state and country as you or even overseas – a more regular occurrence these days as businesses turn to foreign companies for support with technology and/or digital services.

Many companies have been exposed to outsourcing in one way or another. And while in theory outsourcing should save time for businesses, it’s understandable you would want to ensure the same service levels are being provided (but for less cost!) – particularly when the services are viewed as vital to the business, despite them being mundane in nature or a burden. So it might not actually be a big time saver after all when handled on your own.

So how can it all go wrong?

While outsourcing for its part can be extremely effective for businesses, it can also be disastrous. Having gained considerable exposure to international outsourcing practice, in my experience failure is a common occurrence – and it’s usually for the following reasons:

  • Lack of local operational presence – The absence of someone local who you can liaise with face-to-face can make the outsourcing process very difficult, and the results can be fraught with problems. Often people will hire through an Australian-based sales person but when it comes to actual operations and liaising with the team, these people have little to do with the actual operations.
  • Believing it’s a ‘set and forget’ process – Many businesses think that if they outsource internationally and hire their staff directly, that is the end of their problems. They won’t have to worry about staff training, staff falling sick, retraining employees or maintaining the quality of their work. But it’s not the case! In my experience you will most likely have the same HR problems you see in any organisation, but with the logistical challenges of being in a completely different country and time zone.
  • Hiring international contractors – This is a very risky option in my opinion, as you are only ‘one’ of their clients and have little to no insight into data security and quality control. Avoid at all costs.
  • Your only consideration is cost – If you haven’t done any process mapping or created back up options for unforeseen circumstances, you run the risk of failure. Instability can occur anywhere whether it be political, infrastructural or even climatic. Without proper contingencies in place, your business could be exposed to considerable down time at what may be a critical stage of your life cycle – defeating the entire purpose of outsourcing.
  • Falling for Google Ads – If you undertake a Google search it’s likely the first ad you see advertises the service you’re needing for as little as $10 per hour. It’s tempting – but beware! These rates are completely misleading and do not reflect the overall costs involved, nor are you guaranteed the quality of work you expect.

How to outsource overseas – the right way!

With the above in mind, the most risk-averse way to successfully outsource overseas is to engage the support of an Australian-based company.  Knight Business Process Outsourcing has the capability and experience to manage office management services for small to medium-sized businesses and can look after your outsourced staff on your behalf. A Perth-based company, our team is highly skilled in overseas outsourcing, finance, accounting and administration, and can ensure the mitigation of any risk while still providing valuable, cost-effective services.

Outsourcing can work for your business when you partner with the right provider. Contact Knight BPO today and discover how our cost-effective services can give you back much-needed time to spend working on your business – not in it.