In the throbbing pulse of global digitisation, the UK accounting sector has long been struggling with a dire skills shortage. This “skill crunch,” threatening the vitality and competitiveness of firms, is a loud echo of a broader global issue. Yet amidst these seemingly ominous clouds, there is a silver lining – outsourcing to third-party service providers.
Decoding the “skill crunch”
At the heart of this talent deficit are three potent challenges:
- Firstly, the digital revolution in the accounting industry has sparked a sudden hunger for technical savants well-versed in data analytics, AI and automation.
- At the same time, an ageing workforce looms large, and there are not enough tech-savvy young professionals in the wings to fill their shoes.
- To top it all off, post-Brexit financial regulations have added another intricate layer of complexity, necessitating niche skills many existing accountants simply do not have.
This skills crunch has deep roots, stretching back to the global financial crisis of 2008. Shaken by financial turbulence, accounting firms trimmed their training budgets, unknowingly sowing the seeds of a future talent shortage.
Add to this the swift current of demographic shifts in the UK labour market, where the over-50s and 18-24 age groups are leaving the workforce in significant numbers, and you have a perfect storm brewing in the accounting sector.
Harnessing the power of accounting outsourcing
To tackle the skill crunch, many UK accounting firms are charting a new course to calmer waters by outsourcing to talent-rich countries like India, the Philippines, and Eastern Europe.
By reaching across borders, firms can tap into a larger talent ocean brimming with diverse accounting skills. This strategy offers an efficient way to secure the right skills without draining local recruitment and training resources.
Besides, who can ignore cost-efficiency? Lower labour costs in these countries mean that UK accountants can access high-quality services for their practices at a fraction of the cost. And with the flexibility to scale operations based on demand, they can easily weather the ebb and flow of the business cycle!
But it is not just about improving the bottom line. Accounting outsourcing involves delegating routine tasks such as bookkeeping and payroll so accountants can concentrate on their core business, sharpening their strategic focus and enriching their client service.
What to keep in mind before accounting outsourcing
Accounting outsourcing can be a game-changer for accountancy firms like yours. However, to truly extract the benefits and minimise potential pitfalls, here are some essential tips to follow:
1. Define your needs (and expectations)
Yes, start by determining exactly what you need. Be specific about the skills, expertise, and services you are seeking. Be clear about your expectations regarding work quality, deadlines, and communication. Establish key performance indicators (KPIs) and service level agreements (SLAs) to measure and manage performance.
2. Prioritise communication
Effective communication is the cornerstone of successful outsourcing. Ensure that your accounting outsourcing partner is proficient in your preferred language of communication to avoid misunderstandings. Regular meetings, email updates, and open channels for questions and feedback are essential.
3. Understand the legalities
Be aware of legal and regulatory considerations in the UK and the country where your accounting outsourcing partner is based. You may need to include specific clauses regarding legal jurisdiction, dispute resolution, and compliance with regulations in your contract.
4. Choose the right partner
The market is saturated with service providers offering many skills and services. Take your time to research potential partners thoroughly. Look at their track record, the expertise of their team, their industry reputation, and the quality of their past work.
5. Secure your data
Accountancy involves handling sensitive data. Before accounting outsourcing, ensure your partner has stringent data security measures. They will be working with your clients’ data, after all! Look for certifications such as ISO 27001 and adherence to GDPR guidelines to ensure data security.
6. Start small
Do not rush to outsource an entire client account. Start with a small project or non-core tasks such as bookkeeping, and as trust and understanding between you and your accounting outsourcing partner grow, you can gradually increase the scope of outsourced bookkeeping work.
Transitioning to outsourcing might seem like a daunting task. But with careful planning and robust management processes, you can effectively navigate potential pitfalls like data security and quality control.
Gear up for the future: Make learning a priority
As the accounting landscape morphs due to technological advancements and shifting business dynamics, continuous learning and adaptation have become non-negotiable for accounting firms looking to stay ahead of the curve.
From disruptive technologies like AI, ML and Blockchain to the increasing demand for sustainability and ESG reporting, the profession faces a tide of change.
You must, therefore, arm yourself with relevant certifications, hands-on experience with new technologies and digital learning platforms to remain competitive. Use a digital learning platform to learn at your own pace and convenience. They also provide courses in diverse areas, catering to different learning needs.
Moreover, there is no substitute for practical experience. Alongside theoretical learning, providing your team with opportunities to work hands-on with new technologies is critical. For instance, working on real-life projects involving emerging technologies can help consolidate their understanding and improve competence.
Importantly, foster an environment of mentorship and collaboration amongst your practice staff. Experienced employees should be encouraged to share their knowledge and skills with less experienced ones. This promotes a learning culture and enables knowledge transfer within the firm.
Over to you
The “skill crunch” might be the spectre haunting the UK accounting industry, but it is not an impossible challenge. The rise of accounting outsourcing partners presents an opportunity for you to tap into a global talent pool, streamline costs and bolster operational flexibility.
While transitioning to outsourcing requires careful management, the benefits of outsourcing accounting services far outweigh the risks. Accounting firms that embrace this change by implementing a robust transition strategy and fostering open communication can successfully navigate the skills shortage and enhance their standing in the global market.
Remember, outsourcing is not a one-size-fits-all remedy. You must tailor your approach, balancing your unique needs and resources to reap maximum benefits. If you want to know more about accounting outsourcing and how it helps alleviate the skill crunch, contact us today!