Jun 2019


Are offshoring labour hire services for Australian Compliance just like Cocaine for accountants?

By: Odyssey Outsourcing
Tags: Compliance Work, hidden costs, outsourcing vs offshore labour hire

This week I had the opportunity to chat to an Australian accountant, who was talking about his decision to outsource work over to Odyssey.

He mentioned that a lot of Australian accounting firms are being sold the opportunity to source a lower cost employee overseas, but on investigation involved a myriad of hidden costs:

  • Recruitment fees of $2,000 to $4,000.
  • Suggestions to make the offshore employee part of your team by bringing them to Australia.
  • A requirement to travel to the Philippines (for example) to train your offshore employee.
  • End of year bonuses
  • 3 month deposits to make sure you are locked into the resource
  • Staff mandatory leave, annual leave, sick leave, maternity leave etc
  • Staff turnover
  • etc

As the Philippines is late into the offshoring world, there is a real shortage of Australian experienced accountants.  Want a 5 year Australian experienced employee – forget about it – they don’t exist!

It’s quite a competitive market at the moment, and employees are jumping jobs for small salary increments. This is especially so when the attachment to a particular employer in Australia can be a career limiting move when the Australian accounting firm employer can’t offer a wide variety of work, nor a good career path.

Given the shortage of skilled Australian experienced employees in the Philippines, the offshore labour providers have more recently been chasing the Big 4 accounting firms, and poaching employees with a couple of years auditing experience.

One of the other hidden costs is the need to train the new staff member, which requires senior Australian staff being involved, sometimes remotely, but usually through an onsite visit (at the encouragement of the Labour hire provider!). Then there is ongoing need to monitor the offshore employee, review their work each month etc etc. This loss of Australian staff productivity in training/supervising/reviewing offshore labour is never discussed by offshore labour hire firms.

And yet, many Australian accounting firm owners continue to look to cheaper offshore labour hire resources, with their eyes firmly focused on the $2,500 monthly fees, while ignoring all the other on-costs which really make the actual cost much higher.

The accounting firm owner we had spoken to had explored the Philippines, but came to the conclusion that he “was just taking crap processes and exporting them to a lower cost jurisdiction” which effectively was just putting off the inevitable need to fix the systems.

The big question is: Are Australian accountants really just fooling themselves as they push into offshore labour hire arrangements?

Australian accounting firm owners are using offshore labour to continue to try to maintain profitability, and to continue to work within a massively changing compliance landscape. They aren’t focused on the future.

If you’d like to talk about how Outsourcing can allow you to detox your compliance issues, then drop Odyssey a line and we’ll show you how Outsourcing your compliance work can assist.

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