Outsourcing Unpacked: Future-Proofing Your CPA Firm in 2025

Sufyan: Hello, everyone. Good morning. My name is Sufyan. I’m the Associate Director, Business Development for Datamatics Business Solutions and I’m glad to welcome all of you to this CPA Talk Series – Insights and Advice. This is a talk series for CPAs, a Datamatics CPA podcast series for growth minded leaders.

And today in the box we have Laurence Whittam with us, a globally recognized expert in strategic outsourcing and talent management and the Founder and Managing Director of Impact Global Solutions.

Named a 2024 ‘20 Under 40’ Influencer by CPA Practice Advisor, Laurence has helped over 500 CPA firms from sole proprietors to Top 100s. I have known Laurence for almost five years now.

Laurence: Yeah, yeah. Around five years, I think. Yeah.

Sufyan: A little more than that.

Welcome to the podcast Laurence. How are you doing?

Laurence: Very good. Thanks for having me on, Sufyan. Nice to see you again and I appreciate you putting it together.

Sufyan: Absolutely. My pleasure. So, Laurence, we are not going to do anything different. Like I told you, these are the topics that we’re going to discuss in today’s first episode of this talk series. These are the questions and topics that you can answer even at like 2:00 AM, if I wake you up in the night. So, let’s begin with the big picture if you can throw some light as to how have you seen outsourcing reshape the accounting landscape for CPA firms over the past decade, and especially that includes an era wherein we all lived through the pandemic.

Laurence: Yeah, definitely. And I appreciate you bringing me on for the first episode. So, very cool. And I’m sure it will be a great series.

And yeah, outsourcing. It’s developed a lot over the past 10 years. I mean, if we look at it 10 years ago, it was really in its infancy, when outside of the Big 4, right? We had some larger firms that were maybe doing it and have set up either their captive or they were using a third party in some capacity to do outsourcing, primarily in India at that point in time, right? Maybe it was infancy as well potentially in the Philippines, but really very early stage there, right.

And it – and it- developed with more of a traditional outsourcing approach, right. And then it sort of has moved towards now where we’re at, where people are looking for more GCC’s to come out, right. We’re looking at the BOT model, right, build operate transfer. We’re looking at huge investment when it comes to offshoring.

Because again, we all know, I mean everybody hears about the staffing challenges that are going on in the industry and outsourcing is one of the key elements to help solve it, right, so it’s gone from, honestly, a big testing phase over the first sort of five years to now. It’s really a lot of people who have tried it.

A lot of people have had mixed experiences, whether good or bad, but a lot of people have stuck it through now and have tried again, and it started to work, and they’ve reshaped the idea of it themselves as to what it should look like, right. They’re a bit more educated on it. They understand a bit more of the cultural challenges that will come up, right.

And really, I see a huge investment in the outsourcing arena. I mean from big to small firms, they’re doubling down in a lot of cases not because of a need right now necessarily, there’s a bit of a lull, and though COVID became a big need for people to do it. But then it sort of teetered off a little bit in terms of that real big need to do it, but it’s an investment they need for the next 5 years because again, at the end of the day, we’re still going to have the exodus of CPA’s and accountants leaving the profession in the next 5 to 10 years, so they know they need to prepare now to get used to it. So that’s sort of what we’re seeing in the space, right?

Sufyan: Yeah. I mean, I think the best thing that happened during the COVID era is now we all know how to do efficient remote working, OK.

Laurence: Yeah, yeah.

Sufyan: Outsourcing is no different.

Laurence: Correct, correct. I mean it was just a big shift in that so many firms worked in the office prior to that and really had very, very limited experience working outside of an office or managing people remotely. There may have been, yes, the occasional employee that goes off site to work, whether it’s on the audit projects or whether it’s flex time working from home, but this is when they already knew how to manage that team then, right? And this is where now we had to learn how to onboard remotely and build the team. And again now we have other challenges coming up with families, more challenges coming up with the family experience side of things. So, every type of firm, every type of business, really got a big wake up call on how can I manage people remotely, which was a big need in order to help outsourcing actually sort of get back on track.

Sufyan: Yeah. Well said Laurence. On the flip side of that, you talked about talent crunch, which is quite evident. I was reading an article a few days back. It says the unemployment rate in the accounting industry is less than 1%. And I would believe that, but still you would see people hesitating going for outsourcing – many CPA firms. I mean it’s like, first of all, outsourcing is no more an unchartered territory that no one is aware of. Everyone knows it, few embrace it. It’s that kind of a situation and many CPA firms still hesitate to outsource which could be because of some misconception. So according to you, what are those most common misconceptions that you have come across and how would you address them?

Laurence: So again, I just attended Engage, right, AICPA Engage and, outsourcing, yeah, outsourcing was brought up quite a lot there as well, right. And also, just in terms of the pipeline coming into the profession to just to quickly mention is that it seems to be increasing, right. So, we’re actually seeing a lot of changes in the market.

It is happening for the better in that we’re actually getting an increased number of talent even in the US that is actually looking at accounting. So, we’re doing all these different things which all help, right? But outsourcing still plays into the picture very strongly, right?

We need to have – there needs to be an AI plan. There needs to be a technology improvement plan, there needs to be an outsourcing plan, a domestic staffing plan. We need to have all these things, and they all play off each other so that we can actually constantly scale, and we’re not gonna have these types of challenges in the future, right? We need to look at all these different options.

Some of the big, won’t say misconceptions, but the misconceptions somewhat come from other people’s experience. And I think that’s where one of the big challenges comes up is that we listen to how another firm like again the CPA firm relationship with other firms, teams is huge, right? We really look for references. We look to talk to other professionals and hey, who did you work with? Right. How did it work for you? Right. What worked for you? What doesn’t work for you? So play in the profession in a way that we really want to talk to each other and understand how it’s going, right. Which is good and it’s a bad thing as well, right? Because what works for one firm doesn’t mean it’s going to work for you, right? And this is where I think the understanding of the outsourcing side of it, I mean, just even from a geographical perspective, there’s lots of different options, right? There’s lots of different models that you can go with.

So just because one way worked for one type of firm in the US doesn’t mean that that’s the best fit solution for you, right? And I think that’s where a bit of that challenge comes up, is that we just listen and then we try and implement straight away without necessarily like looking inside our firm to think about like, OK, what is the approach for us to outsource and what’s going to be most successful for us and then sharing that with the providers so that we can actually have a better due diligence stage to figure out who the best provider is for us, right. But also get everybody on the team because I mean I always see outsourcing as a partnership, I mean, we are really. It would bring team members, staff generally into our into our firm, right and we want to make sure that it works. There’s going to be problems just like in any business, we need to have leadership in those organizations that we trust with those partners.

It’s not really a vendor approach, right. It’s not a software we’re just plugging in, right? These are people you are dealing with. So, we want to be able to trust the people we’re working with, we’re able to solve those problems. So that is a big, I would say, somewhat challenge – like a little bit of a misconception, but more of a challenge, that just I see the firms weren’t really thinking about it for themselves. They were just going off. Oh, this person had a good experience with this firm. Let’s try that. Right and let’s just try and see if it works.

And then again the misconception, I mean the big misconception, is around sort of this – the culture and the communication aspects, right, is that we can’t do it because of the time zone, right? We’re not going to be able to communicate with them. How are they going to be able to do what we’re doing and if you actually look at the space, especially in India right now, we have these training institutes that are training to do the CPA, right. I mean, they’re doing the US licensed CPA, like traditionally for accounting we have CAs in India. So, it’s a different sort of education path and again transferable, but not the same, right. But now we have a lot of these programs that are actually training to do the CPA, to do the EA, right. And we’ve got a lot more experience when it comes to talent in India or in the Philippines, who are trained and have worked for US firms now for years, right? So not just the Big 4, but also small sole proprietors up to sort of mid-size firms. So it’s there’s – just a huge depth of talent you can dig into. But you can’t.

It’s not a plug and play approach. You’ve gotta be able to think about it from – I need to change a few bits in my phone to make it fit because these are different people with different needs, different cultures, right? And it’s not huge changes, but it’s things that we need to be cognizant of.

Sufyan: No, I completely get that Laurence. And in fact, with Datamatics Business Solutions, since I talk with prospects and clients daily, I think this needs to be addressed properly that we do not sell anything that is available off the shelf as a product, we rather customize solutions.

So all those misconceptions about if it is going to fit in for us or not -it’s very simple – you cannot use the same yard stick for all the problems and I’m glad that a lot of outsourcing companies including Datamatics Business Solutions, we make sure that we are addressing the requirements and providing the solution based on that.

Now coming back to the benefits of outsourcing, I mean 15 to 20 years back, if we used to talk about outsourcing, it was only about saving money and nothing else. But in today’s date it is a bit different. There are other benefits that we usually do not talk about that also includes having a better cash flow, that includes having better work-life balance, etc. So from your experience, what benefits do firms typically unlock when they successfully implement an offshore accounting team?

Laurence: So, I think it’s two parts to this, right, there’s – what are the benefits, but then there’s also like, OK, how are we actually sharing the benefits internally, right? It’s in the firm so and what I mean by that is there are going to be certain benefits that are more of a benefit to the partner group right such as bottom line savings, such as again being able to scale and not have to think about the staffing side of it as much having sort of more of a, again at the end of the day, you have when you work with an outsource partner, you have like a recruitment team, right that is able to go out and find your talent. You really just have to interview right? And do that and you’re able to give them the testing, they’ll do all that piece of it, they’ll do all the due diligence and all these aspects. So you really have that custom recruitment team in the background too.

But then it’s leveraging other pieces to it, right? So I mean when we look at accounting firms, we tend to just hire accountants, right? And this is where this gives us the option to hire software developers, to hire back office admin, right, at a rate where it makes sense as a firm to do it.

Its another thing like hiring a software developer in the US, you may be paying $150- 200,000 to do it right, or you’re gonna hire somebody with a just a junior level of experience, right? So that’s more testing and feeling out the waters. So now you actually have this access to other types of talent that we know that we need in the profession where we don’t currently have them.

OK. And if you look at the big firm, they’re expanding in that area a lot more, they’re actually adding different professionals inside the organization to make it work compared to just focusing on accountants, tax and audit hires right? So, having access to that whole broad level of talent is a huge advantage right in that sense as well. The other piece is standardization, right? I mean what we find is, because of the culture in India, we need to be a bit more process driven and because it’s just remote work, we know we have to be more driven. We have to have standard operating procedures in a way that we have – one way we do it, one way we manage it, right. And standardize reporting and all these other aspects that come into just being more of a one-firm approach.

So, it’s a great, it’s actually a great sort of stabilizer to a firm if they’ve done acquisitions and they have multiple offices now, you can make this the outsourcing from the core area from where you build it the way that you want it to look as an overall firm, teach them the one way and then you sort of start encompassing all the other offices into it. So I’ve seen firms,, larger firms typically, do it that way where they’re actually like centralizing the outsourcing unit as hey, this is how we’re going to build our one firm approach, right. And we’re going to be able to then plug people in accordingly in the different offices one at a time as needed, right?

So that’s sort of a benefit and the second piece where I mentioned is that we need other people in the firm such as staff level, senior level, manager level employees.

They maybe don’t see the the profitability side of it in a lot of cases but as you mentioned, I mean if one of the benefits is that they’re not gonna have as busy of a tax season, that’s great. I mean that’s a huge advantage to them, right. But we need to, we need to translate that across the firm, right. I see too many firms, not necessarily, fully embracing outsourcing and saying like, hey, listen guys, this is for your benefit, right? We’re not doing and what comes up then is some voices in people’s heads if this is a risk for me.

Am I going to lose my position now because we’re saying that this is really good talent? OK, I’m an entry level person coming into this firm. Does that put my position ar risk? No is the answer. For CPA firms 99% of the time as of what I know, it’s no is the answer. No, it’s not a risk. It’s to help you benefit to make sure we can focus on you and a career path, right. So it is one of those things we see in the media with these large organizations where again, outsourcing has been a thing that has really sort of replaced teams in some sense as well. So that concern is always there in people’s minds, right? You don’t know. So, you do have to talk to your team and that’s where that messaging has to come in. In addition to like the real core benefits of doing it.

Sufyan: Makes sense. Makes sense.

Let me let me shift this discussion a little towards geographical benefits and because you have lived in India before, is why I think you’ll be able to answer this in in a precise manner – talking about the talent pool and time zone advantage and English proficiency.

There are several offshore destinations available today, but what makes India a preferred hub for accounting outsourcing?

Laurence: So India has the most experience when it comes to like accounting firms working within the US right, at the end of the day. So I mean the depth of talent you can get and the broad level of talent you can get access to is the biggest, right, really, across the different geographies.

Right. I mean you’ve got the tax, the audit you’ve got accounting, you’ve got then different specialties and sort of practice, very specific practice groups, industry groups, right? You’re gonna see it in a hugely broad fashion, but also to a point of like a lot of these high-level experienced talent- directors, senior managers, managers, they’re actually in the teams coordinating with direct clients for some of these firms now in a lot of cases. So, you get the client experience too.

It’s been done for so many years, like 30-40 years, right, in that sense, and you’ve got hundreds of thousands of professionals – just with like 100,000 with Deloitte, I believe, right? So it’s the access to that talent pool is enormous, right? So, and it’s and it’s very deep talent. So that’s definitely one of them.

I mean the time difference again can be used to the benefit of the firm in a lot of cases, but it, and this is where, it comes with a challenge, right? And it comes with a benefit, right. If you set up a great system that overlaps where you can have very clear communication right where you can leverage the13 1/2 typically, it could be 16 1/2 in some places in the US right – the hours difference, it means that you can provide the work and have it turned around for you by the morning.

Right, now, but there needs to be good standardization there in terms of, OK, if there are issues, what do they do? Do they go on to the next project, right, do they? Are they able to escalate internally to a certain senior right? So there needs to be these or do they go to an FAQ guide about certain things in the tax return as an example right, you need to provide them the resources to be able to do that job right? And do it efficiently, where there’s not that downtime that comes if you just provide them enough projects and you’re not awake and you’re not going to be able to provide them something else or help them with an answer during that period of time, right, we may normally have evening meetings. You may need to shift that to morning meetings to make it work based on where you are, so there are changes in the process that we have to do to make it work, but it can be hugely valuable because again, now you’ve got really like a global workforce, you’re technically working in the office every hour of the day, right in a lot of cases, so it can be extremely valuable doing it that way, right?

I mean, I will say that a lot of firms and a lot in India specifically, like they are more than happy, like they’re used to working in the evenings, right, as well. So, they’re more than happy to do overlapping shifts in a lot of cases. But from a longevity perspective, right, we’ve gotta make sure that as we’re building a team offshore, we do have to think about -make sure we don’t have too much burnout, right? How do we retain the best talent?

If you’re less flexible in the shift timings and you’re in California and you need and you really like, I need a six hour overlap or a 5 hour right? You’re gonna get burned out quicker than you will with another firm that is like, listen, as long as we have 1-2 hours in the day where we can communicate with you, we’re good, right? So that’s where all work from home occasionally and all these things, as long as it’s done securely , it works.

So that’s like a huge benefit to it. I mean, we see these other geographies popping up with access to US talent, but it’s limited in certain industries or divisions. There isn’t as much depth there right now. Well, there’s a limit on the type, right? So the service line for example, like you may not be able to find every service line in that location.

Sufyan: Yeah. Yeah. Makes sense. And talking about the language proficiency as well, Laurence, in in India, precisely in Mumbai where our operations is based out, English is the most second most spoken language here in Mumbai, being the financial capital, the kind of a talent we hire. We never faced an issue with regards to their communication skills, so that that has been taken care widely across not only in Mumbai, other places as well, but the reason I’m saying Mumbai is because this is where our operations is based out at.

Laurence: And I mentioned it’s very similar though for the US, right, it’s from an accent perspective. So again this is where like one of those challenges come up of like, OK, I tried it, wasn’t able to communicate with them very effectively, right? So and it was maybe because of the accent, right?

I’ve lived in India. I’ve talked to Indians every day of my life for the past 12 years, it doesn’t matter where they’re from in India, I’m gonna understand them, right. They can talk in Hindi a little bit and I’ll be able to get the gist of what they’re saying, right. So maybe some of the local languages not as much, but like I can get the gist of what’s going on, but that’s not everybody, right?

So, but I can also go to places across the US and I may and they may have a much stronger accent, I find them hard to understand, right. So that’s whether it’s one of those elements of like, OK, maybe it didn’t work in a specific area as well.

You may need to go to a different again, state or area within India specifically as well, where there is a slightly better communication level than necessarily somewhere else, right? So these are all elements that we’re going to think about.

Look at our firm first. Who are the people we have? Who are the communicators? What does it look like? And then we sort of start to look at options.

Sufyan: Yeah, well said. Well, as we are moving to the end of this episode, I would request you to cover one last topic for this episode that is about your advice. I mean, what advice would you give to a CPA firm, those who are considering outsourcing for the first time?

Where should they start? What should they look into for finding a partner? You mentioned that outsourcing is a partnership. It’s no more a transactional business. So what should they look for in that partnership? And also if you can cover that, how is outsourcing evolving as technology and regulation and client expectation continue to shift. How do you see the role of outsourcing evolve?

Laurence: So, when we talk about getting started, I think it depends a little bit on the size of the firm in my opinion.

So, if it’s a smaller firm, right? Make sure you again look at what the real goals are of your firm and what the reason why you’re even looking into this is.

When you know that and you know the culture of your firm right, already. So, after you’ve actually figured out why you’re doing it, then put together a plan, at least for a year. To say, OK, where do I want to get, right? What do I want to get out of it? And how am I going to track that? Am I actually doing the things I need to do in order to get there?

Because then, otherwise what we do is we tend to offshore and just hire, and we really don’t have a metric to put in place to say how successful we are being at doing this, right, because there are different things.

Even if somebody isn’t as efficiently working but there’s a cost benefit to doing it right? It’s like, OK, do I really need them to be 100% the same as somebody else internally? And what we’ll find is actually if we level the playing field and really look at metrics, not everybody internally is performing at the same level, right.

So, we’ve got to make sure we have those things in place. Typically smaller firms, it’s good to start there because they may, they don’t have those systems in place as often, right, and also it’s really important to know what the reason for doing it right is internally, and share that reason across the firm, right.

When we look at bigger firms, and again, there’s that midpoint as well and it sort of varies a little bit as to what’s big as a firm.

But for the larger firms, think of it as starting a new office, right.

What are you going to do if you start a new office, outside of having a plan, you should still go and have a plan for doing it, but more than likely, you were going to go and, if you’re acquiring somebody, whatever they are, you’re gonna go and visit them, right, you’re gonna go and visit them. You’re gonna be there in person. You’re gonna get to understand, OK? I want to meet their partners in person, right?

I want to go and see the location right. I want to go and make sure I understand what the culture is like so that I can actually create an office that is going to help retain the talent and make sure we’re treating the talent in the right way, right.

And the reason why I say that is because a lot of the larger firms look at it more of like global delivery centers, BOT models, right, or treating it like I want it to be like my office, even if they don’t have the compliance piece that is needed or they’re not going to be their employees, but they’re going to be managing them fully. You can’t manage and really make sure the team is going to stay there with you, right, if you don’t look after them, right?

So that’s where I say like there has to be, it doesn’t have to be day one, but I say it’s quite an early stage approach, right, that I think a larger firm that’s really investing in doing it, should go over and see who your partners can be.

Go do a proper introduction yourself to look at the different sites and figure out what works for you right? That would be the ideal scenario in a lot of cases.

And then I think your second question was around so like what’s to come, is that right?

So I believe yeah, so I believe there’s going to be a lot more investment in outsourcing personally, in offshoring, in different models, right. I do believe there will be more global expansions. There will be people testing in different areas, geographies, but I think there will be again, over the next few years, a big double down in the talent, I see it already, offshore, right? Whether they’re in India, whether they’re in the Philippines, wherever.

It’s that they’ll be looking at multiple locations. So hey, I can get this type of talent in the Philippines. I can get this type of talent in India. Really I should have both, right? I mean, let me, if it’s that easy to set up another office essentially like with a provider, so that I have less of the risk, but I have access to the talent, why not do that, right? So I think you’re going to find more and more of these firms, especially on the larger side, I mean multiple sites.

But really looking for more ownership of the talent, meaning not ownership ownership, but at least it’s more like their talent, right? It’s more like we want a responsibility for building a good culture with the team members we have, making sure we have clear oversight, making sure that we’re involving them in our events that are going on, even if we’re doing something virtually rather than just rather than just treating them like a workhorse in a sense, like essentially just a project, right, that I see a lot more firms looking in that way because it fits their culture better as well, right?

And they did it for the purpose of doing work initially, but they’re really people organisations so they want to take that approach. So, that’s what I’m seeing.

Sufyan: All right. Well, thank you so much Laurence, for all the insights and this discussion. We can go on and on about outsourcing as a topic and we can cover hours for this topic. But to respect the time, I think that’s a wrap on today’s conversation with Laurence, everyone.

This discussion with Laurence is insightful, practical and packed with actionable advice for any CPAs looking to scale smarter. Stay tuned for our next episode in the CPA Talk Series. Thanks again, Laurence.