However, if we try to trace back the origin of the idea of Outsourcing, the exact timeline isn’t quite clear. But what we do know is that it was somewhere between the 1950s and 1960s that businesses started to realise the importance of focusing more on core areas, following which, in the next couple of decades or so came the concept of outsourcing.
Kodak was one of the first large companies to outsource most of its information technology systems in order to increase its flexibility, thereby offering a window to focus on their core business processes. This was followed by many other companies that ultimately popularised the concept of outsourcing.
Now let’s dive into the history of the Accounting outsourcing industry and uncover a few facts.
Accounting Outsourcing-Busting the myths
There is a general misconception that outsourcing started with the IT sector during the mid 20th century, which isn’t quite true. Accounting outsourcing was there even before that but it wasn’t really thought of as an outsourcing model. The idea was already out there.
Great Britain has always had a dominance in the legal and accounting industry and it was during the mid-19th century that the prevalent case-law systems compelled business owners to seek professional guidance from specialists. Following this, Great Britain saw the creation of a number of private law firms that offered consulting services.
The Big 4 Accounting firms follow a similar history as they started as legal and accounting/audit consulting firms and eventually popularising Accounting audit and legal outsourcing practices. Ever since, Accounting outsourcing has become a popular business strategy as more and more businesses/accounting firms/accountants are outsourcing their non-core accounting tasks to outside firms, going even beyond international borders.
Reasons why Accounting Outsourcing became so popular:
While the initial considerations around accounting outsourcing revolved around seeking professional help, it now has much broader considerations. Here are a few of them:
Cost-effectiveness:
Outsourcing is a great way to save costs with options like pay for the services you need when you need them. You don’t need to outsource your accounting work all round the year. Moreover, outsourcing can give you the option to leverage the latest technologies without having to invest in them yourself.
As an example, specialised bookkeeping service providers work with multiple accounting clients, they use advanced accounting software and solutions. If individual companies were to purchase these latest software on their own, they would have to shell out a lot more.
More time to drive core business functions:
Outsourcing has come up as a key reason to enhance your overall organisational productivity as it frees the employees of the unnecessary mundane repetitive tasks. Once you outsource, it becomes the responsibility of the service provider to ensure accounting processes are error-free and on time while you can focus on other key growth areas.
Upgrade and adapt to the latest industry trends:
Following up on the above, since outsourcing can eliminate the burden of tasks like bookkeeping, compliance, tax filing, etc, it allows your employees to work on developing their skills according to the industry trends, thus offering you a competitive edge.
The Future of Accounting Outsourcing:
Ever since the concept of outsourcing has been popularised, it has only continued to expand and become something that serves as a key strategy for businesses to allow themselves to concentrate more around their core business areas. However, there’s still so much more accounting outsourcing has to offer in the future.
As technology finds its way into traditional bastions, the results are exciting, opening up more avenues for improvement. Here is a look at the top changes that can be expected in the accounting outsourcing industry in the future.
Read the full article here: Future trends in Accounting Outsourcing Industry
Conclusion:
Outsourcing is more than letting an outside firm take the extra workload off your shoulders. It is a key business strategy that successful Accounting firms and Accountants are already well-aware of and leveraging it to grow their practice, thereby making more impact on their client’s businesses.