What offshoring vendors don’t want you to know
Confronted by a chronic talent shortage, fee compression and ever-increasing workloads, more U.S. accounting firms are turning to offshore talent.
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1. Offshoring doesn’t necessarily mean India. India, with its large, well-educated, English-speaking workforce, has been a hub for outsourced customer service and IT talent since the early 2000s. Many other industries followed, including accounting after COVID. India has the third-highest number of enrolled agents in the world. But did you know the Philippines also has a large, well-trained English-speaking workforce with lower turnover risk? That’s because Filipino offshore workers have fewer opportunities to jump to another agency or firm within their country. That’s especially important for small and midsized U.S. accounting firms that only want a single worker. Meanwhile, Argentina offers well-trained, affordable talent with the added benefit of U.S. time zones, similar holidays and a more familiar foreign accent. That’s key when putting an offshore worker on a client call.
2. Results are not instantaneous. It takes typically two to three years for an offshoring initiative to start delivering all that was promised. The first year is a learning period in which you’ll see some wins, but also major roadblocks. Maybe training wasn’t right, or processes needed to be streamlined, especially with different time zones involved. Maybe the composition of the current team wasn’t correct, or perhaps some members needed to be replaced. The second year is when those roadblocks get addressed and results start approaching what you originally expected. And somewhere between years two and three, everything clicks. Many vendors will let you believe the cost savings and workload relief kick in as soon as the contract is signed. That’s simply not reality.
3. You’re not required to go through a vendor. Renting offshore talent through a third-party firm is the most common route, but it’s not the only route. More U.S. accounting firms, including small firms, are going “direct,” which means hiring full-time employees overseas through a PEO or EOR rather than renting them. It’s similar to employing a remote U.S. worker in another state. Going direct gives you control over strategy, recruitment, quality standards and technology. That results in better security, better quality, more client comfort, and lower long-term cost than going through a vendor. Note: Even small firms can go direct starting with a single hire and then scale up as needed.
4. Your onshore team must buy in. This is a big one that many firms overlook. For an offshore relationship to work, your onshore staff must be willing to collaborate with their offshore colleagues. This is something that most vendors don’t have enough experience with. Getting onshore buy-in starts with a firm-wide or department-wide town hall in which leadership explains the reason for offshoring — whether it’s addressing capacity, staying competitive, or something else — and how it will make employees’ work lives better and help them move up.
Don’t underestimate incentives. Track margins on every engagement rather than just the U.S. person’s billable hours. If hours are the only metric, then sending work offshore just makes an employee’s numbers look worse, and they won’t do it. When margin is the measure, the U.S. person looks good for using offshore resources and the engagement’s profitability goes up. You can also build offshoring targets into the job itself. For example, make it clear that you expect 50% of simple returns, 25% of medium-complexity work, and 10% of high-complexity work to be sent offshore. Then track whether that’s actually happening.
5. You don’t own the talent. Vendors will tell you the offshore staff are “your people” since you train them, invite them to meetings and treat them like employees. But they aren’t your employees. When you end the vendor relationship, you lose the people you trained. Also, since vendors know clients will do the training, they often hire less experienced, less expensive workers. Once those workers gain experience (often from client-provided training) and become too costly, the vendor places them with another client at a higher rate and keep the trained talent for themselves.
6. It takes real effort to ensure “work gets done while you sleep.” Rather than treat the half-day time difference between the U.S. and Asia as an obstacle, vendors like to spin it as a benefit: “Your offshore team is working while you sleep and the work will be ready for your review when awake.” Time zone arbitrage sounds great in theory, but it takes real tweaking and adjusting on both sides before you find the sweet spot. Expect this to take at least a year. In the U.S., you may need to start your workday an hour or two earlier, and offshore staff may need to start work an hour or two later. But you can’t have your offshore team staying up late and getting up early at the same time. That’s simply not sustainable. You’ll also need to change how you end your day, since work getting done while you sleep depends on clear instructions. Take 15 minutes at the end of each day to give detailed directions to your offshore team, ideally on video rather than in writing.
Also keep this in mind: If you want your offshore team working normal U.S. business hours, you likely won’t get a vendor’s best people. If 100% hours overlap is the goal, avoid Asia and look at Argentina.
7. A senior is not always a senior. Once vendors realized clients would pay more for senior titles, they began inflating them. This is one of the biggest complaints we see about the rental model: “We asked for a senior but got a staff-level person instead.” To avoid this, interview the actual person who will do your work, not their manager, using technical questions and independent skills-assessment tools like
8. Cultural differences are real and they matter. Offshore teams observe different holidays and PTO schedules. They may respond more slowly to emails and calendar invites unless clear expectations are set (e.g., a 24-hour email response policy, immediate calendar acceptance, etc.), and they are often more reluctant to flag confusion. This can cause inefficiency and miscommunication. Since vendors typically share the same culture as their workers, they may not recognize these gaps themselves. Ask prospective vendors what cultural training they provide.
9. High-level due diligence is not enough. Due diligence must go deeper than vendor-provided materials about their processes and certifications. You need to get references from other firms that vendors have worked with and verify all their credentials independently. Ask about data security protocols, communication expectations (response times, turnaround for different assignment types), and how they handle problems like quality issues or personnel conflicts. Also ask about annual price increases and how much of what you pay actually reaches the worker.
10. There is no legal accountability. Contracting with a U.S. or Canadian entity gives you legal recourse. But in offshore jurisdictions, even valid contract claims often aren’t worth pursuing, given backed-up courts. The more effective lever is reputational: Share your experiences with peers, alliance leaders or your state CPA society. Legally, accountability is hard to enforce but reputationally, it’s very possible.
Offshoring can make a significant positive impact on your firm’s capacity and margins, but it’s not an immediate plug-and-play solution. Choose your model deliberately, invest in buy-in and training, and don’t assume your overseas colleagues or vendors understand how your U.S. team works and what clients expect. It’s a two-way street. Look both ways before crossing.
