One way CPA firms can meet the challenges of the future is to focus their resources on the most important functions and outsource other areas. Done property, this avoids the pitfalls of the traditional solution (adding more people) while avoiding the downside of outsourcing (losing control). Being a truly full-service organization is an admirable goal but rarely possible. Upon analysis, being completely self-contained may not even be desirable.
This is where business process outsourcing (BPO) services come in. BPO is the transfer of a function or service or delegation of day-to-day, nonfiduciary responsibilities to a third-party supplier. This makes best practices available at sometimes a fraction of the cost of in-house. The technological revolution of the last decade has made outsourcing more efficient and accessible than ever, while significantly enhancing the control and quality of the functions. BPO services have been predicted to grow in leaps and bounds; Gartner Dataquest has predicted that BPO of finance services will exceed $38 billion in 2004.
A firm needs to understand where its real value is and put its best people and resources there. All other processes become candidates for outsourcing. The following are common BPO candidates:
* Bookkeeping for clients
* Tax co-sourcing solutions
* Document management
* Information technology (IT) services.
Outsourcing the bookkeeping function. CPA firms that provide accounting services to clients typically follow one of two methods: sending its accountants to a client's office to write up the books, or maintaining the books in its own offices after calling in the base documents. Either method requires a battery of accountants to balance the books and maintain records.
With increasing costs for recruiting, training, and retaining accountants, as well as for maintaining desk space, firms can benefit from contracting with a BPO service provider to manage the base accounting work at a fraction of the cost. The CPA firms can then concentrate on value-added services while bringing clients the expertise and stateof-the-art technology that the BPO service offers. Such arrangements include the following features:
* Use of the service provider's trade name
* Access to the service provider's software at a fraction of the cost
* Use of the service provider's marketing collateral
* Access to a standard workflow for all the processes
* Staff training
* Ease in conducting reviews.
If a firm does not want to directly enter into a licensing arrangement, it could refer clients to the outsource service provider under a referral agreement. This would again allow the CPA firm to focus on providing clients with high-value services. Clients would gain access to timely financial statements without needing their own in-house accounting team, allowing them to …