It is well known that a business may find it difficult to consider outsourcing its operations to another country at times. It may be nerve-wracking, of course, to assign work to others when you cannot even see their faces or identify how many of them are working on your requests while attending to your clients.
Establishing a professional relationship may need some time, and businesses lack this as well. Furthermore, it is sometimes difficult to get precise information on how to advance and complete the task you delegated without having a negative impact on the expenses, earnings, and overall outcomes of the services that are being tried to be outsourced.
I have personal experience with how some businesses attempt to outsource but fail due to a lack of knowledge, while others successfully do so with no issues at all.
That’s why, this blog post seeks to make clear the benefits of outsourcing bookkeeping and accounting services—as well as other services—to other countries. Naturally, weighing the benefits and drawbacks as well as some basic information and advice that could be helpful when deciding to work with the greatest vendor accessible.
Visitors also read: What's Really An invoice? | Mastering Invoice Creation - [Invoice template for free].
To help you better understand the advantages and disadvantages of working with the alternatives you have available to outsource your services, I would like to tell you that I created an Outsourcing Vendor Evaluation Checklist, which is accessible for free. Find it by clicking on the button below.
If you do not have any vendor so far, you can get started with Bookkeepfix now. Book a 15 min call to know more about the service clicking here.
What are the pros and cons of outsourcing your services?
It goes without saying that outsourcing your company's responsibilities might be a wise decision in terms of expenses and improving workflow. In the end, money is king, which is why a large number of businesses worldwide have chosen to outsource a large portion of their work to cope with the costs.
Businesses find that after outsourcing, they can save up to 40% of their annual operating costs and are likely to achieve the same or better results. This is a huge financial relief that allows the business to invest the extra profit in other critical areas of the business.
Additionally, there are other advantages to outsourcing for the business outside only the potential for cost savings. A business that outsources its work has a very good chance of finding a group or individual with extensive knowledge in the area they wish to operate in.
With time, these new team players begin to assist and contribute in bringing fresh perspectives and enhancements to the company's internal process or the primary strategies of the assigned tasks. Long-term, these advancements and improvements often result in more revenue and profit for the company that is outsourcing its services.
But one thing that is apparent about the outsourcing process—and something you can see from both big and small companies that have taken part in it—is that a company cannot simply outsource its services to the cheapest alternative or to the first country they find.
Generally speaking, when a business outsources to the incorrect place, it may encounter some annoying operational issues that will undoubtedly have a negative impact on the tasks' outcomes and most probably, on the relations this company has with its clients.
Furthermore, in their search for the best deal, these companies will tend to look for alternatives where foreign suppliers are willing to provide their services without a contract. Believe me, that's never good news, and it's wiser to see it as a clear red warning.
All things above considered, we might see the following benefits of outsourcing your services abroad:
Low operating costs
Obtaining access to competent individuals or teams
Enhancements to the business strategies or tasks
Additionally, the main drawbacks could be:
Different location or time zone.
Not clear contracts or SOWs.
Impacting negatively on the relationships with your customers
Based on the information mentioned previously, I think that Latin America is the greatest place for American and European businesses to outsource their duties or occupations since there is a combination of quality and cost savings.
Latin America as a good place to outsource your services
Mexico, Brazil, Colombia, and Chile have developed a strong technology infrastructure in their cities over the last few decades, allowing these countries to establish themselves and thrive in the worldwide market, mainly, in the outsourcing industry.
Furthermore, taking advantage of this economic background, the BPO industry has had a significant impact on making these countries adapt their people to operate under this business model, which minimizes the friction and time when businesses choose to outsource their services, all of this, in terms of training.
Of course, another advantage when companies decide to outsource their services and responsibilities to Latin American vendors (which is obvious but extremely beneficial to the companies that outsource), is that the countries in question are in the same time zone as the United States and some of them can work along with some countries in Europe without a problem.This also eliminates the timing challenges of outsourcing when it comes to deliver results.
Aside from that, average annual incomes in Latin America are over 55% lower than those in Europe or the United States. For example, a senior bookkeeper in the United States should be paid between $60,000 and $75,000 per year before taxes, whereas the same position in Colombia could cost between $20,000 and $25,000 per year.
However, there are even cheaper solutions than hiring someone in these places, such as Bookkeepfix, which costs just $8.5K per year; get started by clicking here.
As a side note, if you want to determine the real costs of hiring a bookkeeper in the UK, United States, or Europe, click below in our salary calculator for free
Free tool: Employee Cost Calculator | Know how much you will pay for your employees
How to prepare a plan for outsourcing your services
I'll walk you through some of the steps that you should take to outsource your services, in the following paragraphs. In this instance, I'll presume you're in need of bookkeeping services.
Assess Bookkeeping Objectives And Priorities
Determine which bookkeeping processes or tasks in your company require outsourcing, such as accounts payable, accounts receivable, payroll processing, or financial reporting. It is critical to always listen to your team when considering moving these major tasks to your vendors. Please keep in mind that the purpose of this is to improve the effectiveness of your staff, not to replace it.
Also, define the goals and objectives of outsourcing your bookkeeping needs, such as increasing accuracy, efficiency, compliance, or cost savings.
Evaluate Your Current Bookkeeping Processes
Evaluate your organization's current bookkeeping procedures, systems, and processes. That will be critical in identifying any difficulties, inefficiencies, or areas for improvement that outsourcing can assist with.
If you've already recognized these and need immediate assistance with your bookkeeping operations, start with Bookkeepfix or schedule a call.
Identify potential bookkeeping Vendors
Create selection criteria and evaluation metrics for evaluating and comparing possible outsourcing partners objectively. If you have not time to do so, use our free template below.
Remember to take into consideration financial accounting knowledge, industry experience, software competency, service offerings, price structure, and customer references.
Plan for transitions and onboarding
Create a clear transition strategy defining the stages and deadlines for moving bookkeeping tasks from internal teams to the outsourcing vendor. Also do not forget to Assign roles and duties for overseeing the transition process, such as data migration, training, and continuing support.
Provide training and support
Create tools for tracking and evaluating outsourcing vendors' performance against agreed-upon SLAs and performance measures and also conduct regular performance reviews, audits, and compliance assessments to verify that contractual responsibilities are met accurately, on schedule, and in full.
Don't forger to provide training and support to internal employees and outsourced vendors to promote a smooth transition and efficient collaboration. This allows to clarify your expectations, communication channels, reporting criteria, and escalation procedures.
Vendor Evaluation Checklist
This evaluation checklist will guide you in making more informed decisions when choosing the right vendor for your company needs
