Andersens looks to India as E&Y tax staff leave London

Arthur Andersen is considering moving its tax processing function out to India as part of radical set of proposals under study by a team of its tax partners.

If the firm decides to press ahead with the idea, it could transfer part or all of its tax return processing unit to India, taking advantage of the cheap labour and property prices available in Asia and the Far East.

More importantly, any such move would set a precedent for the other Big Six firms, which would be keen to cut down on their overheads by contracting out all of their back-office work.

David Oliver, a tax partner at Arthur Andersen, played down the significance of the move.

He said: ‘India is a possibility (as a new site for the firm’s tax return processing), but so is a location outside London.’

But an Andersens spokesman confirmed to Accountancy Age that a top team of tax partners was currently looking into the idea to examine its viability.

The firm’s partners have not yet discussed the matter formally.

British Airways has already taken the lead among UK companies by contracting out 10% of accounting staff to Bombay last month as part of a u1bn global efficiency drive. The move will also mean that up to 5,000 jobs across the company will eventually go from BA’s staff in the UK. If successful, the company plans to move more of its accounting function to India in the future. BA, which employs around 2,000 accounts staff in Britain, can recruit qualified staff in India for #4,000 compared to the #20,000 it has to pay in the UK.

Andersens’ revolutionary move comes as Ernst & Young’s begins centralising its tax return processing operations into two dedicated centres in anticipation of the Inland Revenue sending out new self-assessment forms on 6 April.

Douglas Fairbairn, E&Y’s head of tax, said the creation of the two specialist centres, in Exeter and Newcastle, would affect around 100 staff from existing offices.

He emphasised that the move would not involve any of the partners, who would continue to give face-to-face advice to clients from their various local offices.

He said: ‘I can’t say how many staff will be made redundant as a result of these moves, but it will be very few. There’s a staff consultation going on at the moment.’

Fairbairn added that most of the back-office staff involved in tax processing would also be redeployed in their existing offices, working in other tax areas.

‘One of the consequences of the new system is that our firm is having to invest heavily in new computer hardware and software as well as retraining for hundreds of staff around the UK,’ said Fairbairn.

E&Y has invested substantially in new technology for its two tax return processing centres, buying in Taxpoint SA software from Data Sciences.

The firm will commence retraining its staff from the beginning of March.