Two-thirds of accountants set to outsource services to remain competitive

Two-thirds of accountants set to outsource services to remain competitive

Accountancy Age and ForrestBrown report shares current views on outsourcing in the sector.

Two-thirds of accountants set to outsource services to remain competitive

Nearly two-thirds of accountancy firms (64%) in the UK are expecting to outsource core services in the future in order to keep a competitive edge in the industry, research by Accountancy Age and ForrestBrown has found.

Additionally, outsourcing’s scope has widened substantially. Over two-thirds of those who responded to the research (67%) said they will consider outsourcing “high-value services” their firm couldn’t offer. This is despite nearly three-quarters (72%) agreeing that “outsourced accountancy services can sometimes have a bad reputation”.

To understand the current state of outsourcing and the views of senior accountancy professionals, Accountancy Age asked over 100 decision-makers and partners at accounting firms across the UK about how they use – or plan to use – outsourcing.

Client focus

Only half are currently offering outsourcing services to clients. And among those who do outsource, there’s still a focus on the staples of outsourcing: bookkeeping and payroll.

The report does, however, highlight an interesting emerging trend revealed by the research. A network of firms is using outsourcing to power up their service offerings, shrugging off the traditional expectation of using an external partner to complete repetitive, time-intensive duties like payroll.

As a result, a diverse selection of outsourced services has blossomed. Tax planning (20% of those who outsource), pensions advice (17%), financial advice and planning (22%) and R&D tax incentives (22%) are the new breed of outsourced services.

Skills and development

One of the most interesting findings from the report, which can be read in full here, is that cutting or controlling costs is a relatively minor reason for outsourcing.

The cost motivation ranked ninth out of 11 options. The traditional driver of outsourcing was resoundingly trounced in our report by more powerful, constructive motivations, such as the desire to develop advanced, specialised skill sets.

Across the board, accountants weren’t interested in a race to the bottom on prices and service delivery, focusing instead of the quality of their work – indicating a potential shift in how firms view both in-house and outsourced services.

Ranked highly as the motivation for outsourcing were “accessing more advanced or specialist skill sets”, “focussing on core capabilities”, “free up resources” and “improve service quality”. The emphasis was on long term benefits.

Commenting on the results of the findings, Jen Eastman, senior tax manager at ForrestBrown said: “Looking through the feedback, I was struck by far outsourcing has come in the profession. Over a quarter of accountants asked planned to use an external partner for R&D tax credits. More widely, two-thirds of accountants plan to outsource, half already are.

“Clearly, any widespread apprehension around outsourcing has dissipated and a new generation of external partners has risen to meet the demand for high-quality outsourcing. The traditional outsourcing staples like bookkeeping and payroll have been joined by a selection of more specialist service providers, which research suggests is a substantial desire for both accountants and their firms.”

“Outsourcing provides an exciting opportunity for accountants, particularly as client expectations continue to evolve and grow. While many already make use of outsourcing, the trend for specialist outsourcing is still nascent – the perfect time for firms to develop their competitive edge with high value-services.”

If you’re curious to know how your services compare to other firms already outsourcing their services, download our exclusive benchmarking report here.

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