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N.S. Vageesh
Mythili Rajkumar

Who wants to employ accountants when BPOs offer to do the same work at a fraction of the cost? That's the number crunching at the moment.

If you are working in an accounting job in a big organisation, you might feel a shiver down your spine as you read this. Your days in the job may be numbered. Your company may well decide to evict you from your cosy chair and "outsource" your job.

The reason is simple. You cost the company too much — and there are cheaper alternatives. What happened to white and blue-collar workers in the US may shortly happen to you. That cold, impersonal and lifeless piece of statistic in newspapers and magazines of "X" number of laid-off workers may soon acquire a fresh meaning.

Just listen to R. Ganesh, a Chartered Accountant, who does "outsourced work" for a foreign bank. He says, "The bank calls us to their office, asks us to observe the work is done in the accounts department. If we think it can be done by us, they just ask us to give a quotation and take the job. Even jobs such as presenting of cheques for clearing are being outsourced to agencies."

Multinational companies seem keen to outsource accounting work. The main consideration is cost. MNC salaries, even at the clerical cadre are likely to be in the range of Rs 10,000 to Rs 15,000 per month, along with assorted benefits (PF, gratuity, canteen, subsidised transport, leave travel, lunch allowances and so on) that add up to another Rs 5,000 to Rs 7,500 per month. Simply remove five such clerks and hand over the work to a chartered accountant firm that will do the same work for the cost of one such clerk. The CA firm has access to and is willing to use its cheaper resources — both the articled clerks as well as paid assistants.

Says Rajaraman, hired by one such firm to do the work outsourced by a large Indian company, "We handle the receipts and payments, ledger maintenance and commercial operations (procurement and supply of material). The company is probably able to get a 30 to 40 per cent saving in manpower and costs." There is of course the downside in this kind of arrangement — dreadfully long working hours, low morale and no sense of belonging, he says.

Cost saving is one of the many drivers, but is not by itself a major factor in the outsourcing of accounting work in the domestic market, argues Sriram Seshadri, a Chartered Accountant. He says that companies, even the big ones, generally keep their finance teams small and lean. These finance teams are preoccupied with regulatory, audit and compliance issues. They don't have enough hands. So they pass out the peripheral work to CA firms.

He continues, "There is a paradigm shift in terms of outsourcing the non-strategic portion of accounting. While smaller companies and business enterprises outsource their entire accounting functions, larger companies do not. Accounting systems are more complex for larger companies, besides being a backbone of real time Management Information Systems. These companies only outsource peripheral work like stocktaking, reconciliation and matching fixed assets register and such other works."

The availability of high bandwidth Internet connectivity is encouraging companies to mull over setting up terminals in the office of CA firms and parcelling out a portion of the accounting functions. Says Seshadri, "A few service companies such as cellular phone companies try and do this. They outsource the work of tele-calling, collection of bills and their accounting to CA firms."

Bandwidth availability is also helping generate business from overseas clients. Cross-border outsourcing of accounting work is increasing, driven by cost considerations. Some CA firms try to pitch for work from accounting firms in the US.

"This type of work requires considerable investments in software packages like `quickbooks' and training people, setting up Internet connectivity, double screen systems, etc. Breakthrough into this market is difficult since the lead-time is also longer. The process of getting work, calling, visiting the US, meeting clients, hiring people and setting up the infrastructure is costly business. Not everyone is geared for this. It happens in a few pockets," adds Seshadri.

K.P. Sarathy, a chartered accountant, who handles payroll and inventory processing for a couple of foreign clients, lists the lower costs and knowledge of English as some of the attractive factors. Apart from this there is also a "currency factor" at work. He explains, "For instance, a gem clip here may cost 10 paise. In the US, it is one cent or the equivalent of 46 paise. You could make a profit just by exporting gem clips — but for the cost of transportation. Here is where we have an advantage. In accounting work, what we are transporting is information. Thanks to the Internet and e-mail, the cost of transporting is practically nil."

Seshadri draws attention to some structural shifts taking place in the chartered accountancy profession in the country, which he expects will force outsourcing trends to gather momentum. He says, "The domination of the profession by the Big Four firms (Pricewaterhouse Coopers, KPMG, Ernst & Young, Deloitte Haskins & Sells) is forcing smaller CA firms — the bulk being sole proprietorships or small partnerships — down the value chain, and this forces the smaller firms to look for such peripheral jobs. There are a large number of chartered accountants in Bangalore who do accounting work for software firms, because the Big Four have grabbed most of the core business."

The entry of foreign companies has nudged out Indian CA firms from their core business of auditing, he says, adding, "Many of them have lost work because there is pressure from the foreign joint venture partner to change the auditors. The incumbent statutory auditor is removed and asked to do internal audit. The existing internal auditor has to give way and look elsewhere. The pressure gets built into the system like this. Indian CA firms have to look for opportunities since their core professional space is shrinking."

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