Outsourcing tax returns to India

D1zzy

I understand that some accountancy firms are now outsourcing completion of tax returns to India, would you mind?

fengirl_2

Do you know which ones and the reason behind it?

D1zzy

I know personally of 1 top 50 firm (rather not give the name) but am told that it is not unusual. Reasons - cost savings - frees their in-house staff to handle the more complex stuff and concentrate on business development, whilst the "grunt" stuff is outsourced at Indian rates but they can still charge their clients their normal rates. Apart from the ethics of it I personally would have security concerns - but I guess it's no different from the Indian call centres used by the banks

Pennywise

Yep, just down to profits. Overseas employee hourly rates can be a fraction of UK ones, so firms who outsource can make a lot more profit if they do it right. As a firm of accountants, we are regularly contacted by this kind of operation who are clearly desperate to get work as they offer the first job completely free, and their fees for subsequent can be as little as 10-20% of the final client fee which is a lot cheaper than using UK staff.

It can't be explained away by saying that it frees time for other tasks as there are plenty of UK based people who provide the same service, but at a higher cost (typically 50% of client fee) due to higher employee costs in the UK.

For my firm, I took the decision quite some time ago not to go down the overseas route due partly to the security implications, but also the practicality of time and risk of shipping documents out there and back or the problems of scanning potentially hundreds of documents to be emailed over. I also have trouble believing that someone living so far away can really have a proper grasp of reality of tax and business in the UK. From my experiences, using subcontractors in other parts of the UK can be bad enough as is having clients at the other end of the country from where you work - i.e. for local clients, I know that "LCC" written on a cheque stub means Lancaster City Council or Lancashire County Council, so I have a fighting chance as to what the payment was for, but someone working in London or India wouldn't have a clue and would have to ask, meaning yet another query or potential for a misposting.

That's my opinion. I am sure others will know of it working well in practice and that's fine. I suppose if everyone started doing it, and accountancy fees were reduced across the board due to competition, then I'd have to go with the flow, but for me, at the moment, it isn't an issue, and my opinion at the moment is that if it's not broken, why fix it, so I'm leaving well alone.

morgani

Have to agree with 'Pennywise'. We have also opted not too outsource for pretty much the same reasons.

I have previously worked for a firm who did outsource and have justified my reasons based on this.

In my opinion why complicate something more that it can be with a several thousand mile barrier?!

We believe in understanding our clients and how can you do this by appointing someone you don't even have the chance of meeting face to face perform the work?

Lets face it, how many of us like being put through to an indian call centre. Those companies lose many customers/clients through a drop in customer service. This is basically the foundation of our business so why risk it?

dharm999

We have outsourced all of our accounting except credit control and sales invoicing. Admittedly we are in industry not practice, but we have the same issues to consider; security, etc.. We found that credit control and slaes invoicing didnt work so well so we brought it back to the UK, but all the rest; payroll, day to day accounting, management accounting, preparation of information for the auditors, etc.. is all done by the team abroad.

For us, what is over their, works very well. I get a team of people who are qualified, work hard, and cost me a third of what it would cost me to do it over here. If someone leaves, I get a replacement, without any of the hassle of recruiting, which saves me a lot of time. The decision to outsource was made before I joined, but we wouldnt go back. It works, to a point. Credit control was a problem, so we brought it back, as clients didnt like speaking to someone with a foreign accent, but given that lots of the companies we deal with have outsourced their Accounts Payable to India, it was a hypocritical attitude. Anyway we had to bring it back, which we did, but it costs me three times as much, and the end result isnt three times better.

We are in a low margin industry, and have to do all we can to deliver profits, an inevitalbe fact of life.

D1zzy

Pennywise & Morgani - if you had decided to outsource would you have advised your clients that their affairs/personal information was now being dealt with in India? I think there is a huge ethical issue if clients think the have given their personal information to their local firm, believing that they are the ones processing it and these are then passed on to be dealt with in India (with its renowned data security issues) without their knowledge. I would be surprised if many clients would be happy if they were aware of the situation.

D1zzy

....the silence is deafening!

ceeforcat

It may indeed be deafening. I used to work for one of the 'big four' before I decided to get a life and not be at the beck and call of an organisation even more faceless than my previous employer - HMRC.

The outsourcing would if hilarious if it were not so serious particularly when a client rang up to make an appointment to see his or her tax advisor i.e. me. Now you course, I did not have the file and , in many cases, had never even seen it. Thre followed much bluffing and excuse-making before an appointment was made for a future day when the file would have been couriered to my office. Meanwhile an e-mail would be sent to me to update me on the status of the file.

Outsourcing to India - no surprise to me at all!

Debt_Free_Chick

D1zzy wrote: »

Pennywise & Morgani - if you had decided to outsource would you have advised your clients that their affairs/personal information was now being dealt with in India? I think there is a huge ethical issue if clients think the have given their personal information to their local firm, believing that they are the ones processing it and these are then passed on to be dealt with in India (with its renowned data security issues) without their knowledge. I would be surprised if many clients would be happy if they were aware of the situation.

Read the small print of the client agreement - more than likely it allows the firm to outsource or sub-contract without permission or agreement from the client.

I'm not overly concerned about security of personal information though. Under UK Data Protection regs, the firm has an obligation to ensure that the sub-contractor has suitable DP processes in place. In other words, the firm can outsource the work, but not the responsibility for keeping data safe.

D1zzy

Debt_Free_Chick wrote: »

I'm not overly concerned about security of personal information though. Under UK Data Protection regs, the firm has an obligation to ensure that the sub-contractor has suitable DP processes in place. In other words, the firm can outsource the work, but not the responsibility for keeping data safe.

True - but in reality that's just asking a few questions and ticking some boxes.

Bearing in mind your tax retun contains just about everything needed for identity theft, if that happened, would you think of questioning your accountant? You might if you knew your data was being handled in India.

I have no problem with outsourcing per se - but for me its completely unethical, and a complete break of trust to do so without advising the client.

(Lets face it even if your contract does say outsourcing is allowed - most clients would imagine it meant to their mates down the road - not to the other side of the world!)