Recently we asked one of our clients Paul Martin from Paul Martin CA on his perspective on why he made the switch to working with Connect Outsourcing.
My main motivation in considering outsourcing was to battle margin erosion. Clients who were using MYOB or XERO were starting to say: “We’ve done all the hard work for you. Surely your fees should now be in the hundreds of dollars?” One client said to me: “Why do I need you? Why are your fees so high?” We started losing clients to a cheaper quote. Some clients were moving from a CA to a bookkeeper or a tax consultant. I don’t think the practice was doing anything
Also the pressure to keep increasing the local labour conditions meant my staff expected a certain level of salary. Essentially my mark-up and charge-out to clients for my fees started to escalate, but my clients were resisting a fee increase.
The Move to outsourcing
First I looked at hiring remote staff in the Philippines using a BPO (business process outsourcing) agent. By looking at a PNL I could see that I needed four staff to manage the compliance work in my business. The cost to hire those staff in AU is $250k. With a BP model outsourcing remote staff to the Philippines I could get four staff of the same competence and qualification level for $100k.
The BPO process:
- They recruit accountants for you.
- They don’t have a ready pool to start immediately, and you get to choose who to interview.
- It was quite a process to recruit, just like it is when you recruit locally.
- Once you’ve picked your team you have to train them on your systems.
- To be certain I was happy the accountants would be a good fit for the business, I flew to the Philippines to train them for two weeks in our processes and in the AU accounting software.
Management issues:
- Just like your normal staff you have ongoing day-to-day staff management issues.
- Now I was having to manage remote staff training and coaching for my outsourced team. They were very smart and well qualified, but it was like hiring a graduate. They really needed to pick up how accounting works in AU. So there was an ongoing pain of constant HR and training.
- As my staff became better qualified and trained through working with me they were likely to be poached by other firms recruiting in the same process.
- We also learnt that in the Philippines there was a culture of staff expecting to leave after 2- 3 years. It wasn’t just about pay — they really expected they would move on to get new experiences and weren’t looking to stay beyond that.
- This created staff turnover, meaning I then had to replace them and travel back overseas to train them.
- December, January, and March were very difficult months, as we had little work for them to do and business shuts down in December and January. So they would come back on 2nd of Jan with nothing to do for 2 weeks and I would pay for it!
- After 3 years I was going up to the Philippines every 6 months.
What prompted the change?
- One of my key staff members who was going to be made a team leader resigned.
- We asked our agent in the Philippines to help us find someone else of the same calibre. they said this was not possible and that we would have to find another entry level person.
We could see that this particular model of outsourcing was not working for us.
Using Connect
I first heard about Connect at a conference. After my frustration in using a remote staffing model, I was looking for another solution. I was working with business coach Viv Brownrigg, who suggested them. I first spoke to Ed in late January and started with a pilot program. We did a trial, and I sent 12 jobs to their team in India. I was happy with the quality of the work. It was equivalent to the quality from my trained team in the Philippines. We work on either a fixed price per service or a percentage, so I know exactly what it will cost me.
The Process:
- We did a trial in March and one week later we were onboard.
- We gave them a list and they provisioned a capacity team.
Straight away the Connect team was at a level of competence that previously took me two years to train and nurture. Now I don’t have to worry about any HR stuff; we can shrink or grow as we need. Connect just makes it happen.
With a remote staffing model we had inefficiencies on the job, so if a team member took 2 hours longer I had to wear it. With the Connect model I don’t pay for any inefficiencies, so it is not a cost for my business. I could see that Connect had already trained their team to the AU standard. They already had AU tax knowledge. We didn’t have to do any remedial training.
Connect also already had senior-level people in their team. With our Philippines team it would have taken years to train and upskill to that level.
We were initially worried about the different time zone. But there is a 2-hour overlap at the end of the day, so we schedule our communication around this. Time zone has ceased to be an issue for us.
I no longer have to manage a remote team. Connect Accounting effectively sells on a time basis.
The Benefits
Our company is growing, and thanks to Connect I no longer have to worry about how I will resource the new work. Connect has the flexibility to move staff from one team to another, giving us the security of resource always being available. Connect also focuses on continually upskilling their staff, so you know you are getting the best.
Using Connect frees us from the annual cycle of compliance obligations. Now we can focus on helping our clients to grow their business. Before we used Connect, we focused on business advisory only when a client asked us. Now we are able to be more engaged with our clients’ business. This give our company a definite advantage.
Our value-add services now include client education. We provide seminars on how to run a better business, and on how to achieve the three freedoms and reduce stress levels: financial freedom, time freedom, and mind freedom.
We are now focused on the client’s business rather than day-to-day management of my team.
Working with Connect means we can also focus more on billable services. We are more organised in getting the work done and less tied up with day-to-day queries. I have billed for more this month than I did 12 months ago. We are now more competitive on price and I am able to protect my margin.
I really believe outsourcing is the future of accounting. We are embracing the latest way of doing things, and engaged clients see it as an advantage. Someone who doesn’t get this is no longer the right client for our firm.
It think compliance will always be required. But the annual focus will shift to real-time accounting where the central focus is what is on happening now. Compliance will cease to be the central focus of an accountant’s conversation.
For me it’s been a mindset change. We now have more time with our clients to focus on building them a better business.
Paul Martin – Paul Martin CA Ltd