Global Accounting Outsourcing

Business concept

The business concept is to outsource the accounting related services of a hotel to offshore business centres. As influenced by Wahby et al. (2017, p. 2071), outsourcing of services can ensure that the business invests in continuous training of staff in regards to latest technical innovation. As supported by Bouillon and Ponte (2018, p. 34), innovation can work on meeting the possible business needs in relation to accounting, forecasting the possible cash flow, bill payment and money collection. A study conducted by the Laity, Khan and Carmel (2016, p. 9), suggested outsourcing in relation to accounting can emerge as a cost saving aspect. The saving in cost is brought through tax compliance and the payroll takes less time. Thus, it is important to understand the possible scope of outsourcing business and gaining competitive advantage. The host company, a US based hotel, wishes to outsource accounting related services to India

Objectives

Reduction in time consumption in non-core tasks by 30% Work in enhancing the level of customer satisfaction by 40% by attending to the needs of the customers

Increasing efficiency of in-house employees by 30% through the use training activities

Reduce the potential risk associated with outsourcing

Long term objective of reducing risk and create a positive business environment and enhancing the profit margin of the business

Market analysis

The host company plans to outsource accounting related services to India. However, before finalising the decision, it is important to analyse the market before outsourcing the task. Following are the possible trends that needs to be analysed for business outsourcing in India (ibef.org, 2018):

India emerges out as a leading destination for outsourcing business and accounts for 55% of market share

2017 and 2018, observed financial influx with the main source of income from outsourcing

For meeting the increasing demands related to skilled labour and outsourcing issues, Indian IT companies set up 1,000 delivery centres

Accounting outsourcing services demand cloud computing and management of databases. India leads the competition by 60-70% cost saving emerging as a Unique Selling Point (USP)

India harbours digital capability hub and skilled labour

Indian IT sector answers the business needs and attracts Foreign Direct Investment (FDI) worth US$ 32.23 billion.

India dominates the global outsourcing market worth $52 billion (india.gov.in, 2018)

Management and operational plan

The process related to offshore outsourcing is linked with several complications. Despite the series of complications, the benefits are usually high. The first step in the mentioned regards, is that the parent company needs to receive the scanned documents. The documents need to be scanned and stored in servers. After the documents are scanned and stored it needs to be segregated as per the need of services. The host company can opt for various services as per their suitability. As stated by Otoo and Drechsel (2018, p. 505), services related to online accounting can work on managing cash flow management and even activities related to book-keeping. The processed data is further given to the client in the event of maintaining standard quality

The next step would include setting up a remote desktop connection that can be further used to gain access to several other systems. The access to several machines and can act as a guide work for outsourcing accounting based services. The client in the mentioned scenario, would be provided with a login ID and password through the implementation of remote desktop. The needed information would be provided through the use of email in regards to tax return or accounts preparation. In the same email chain, the clients making use of the services would inform the place in the network from where the needed documents and papers can be obtained. The outsource office would login and provide the complete work assigned to them. The Indian office would email in regards to completion of work and present with open points if any.

The business works on managing the risks effectively. As per the study conducted by Nacer et al. (2019, p. 60), if the risks are not managed effectively, it can lead to failure or loss. Outsourcing with certain businesses helps in reducing the operational uncertainties as the business shares accountability with the outsourcing vendor. The host company, thus works on managing the staff enquiries and enhancing their present service operations while the company that handles the accounting related services should work on doing the same. The increase in the competitive environment within the growing business needs to change to respond to the dynamic market environment. The changes are highly inclusive of corporate restructuring, slump within the economy and temporary functions. As stated by Charles and Edgar (2019, p. 7), outsourcing ensures flexibility within the operational plan and can allow the host company to change the service provider as required. In addition to that, the management believes the fact that outsourcing improves the capability of the company to scale up or down when there is a rise in uncertainty.

Marketing plan

Before establishing the business outsourcing process it is important to ensure the market is appropriate for growth. Following are the things to be considered while designing a proper marketing plan.

Product: The company chosen in the mentioned regards works on providing accounting related software. The modern technology for maintaining the accounting related activities as per the requirement of the host company can be provided by the chosen company. The training cost of the employee of executing the accounting related services tend to be on the higher side (Guggilla et al. 2018, p. 283). It is for the same reason, the Indian company offering the services related to outsourcing can provide affordable outsourcing related services and accounting services are of high affordable rates

Price: The pricing of the chosen Indian company where the accounting related services need to be outsourced is highly dynamic in nature. For similar services that do not demand implementation of high skills, the company charges price as per the market. This is important as with the growing IT requirements, the competition within the sector is growing and the client wants to save money for the tasks which are not demanding (Mann and Graham, 2016, p. 530). Thus, the implementation of competitive pricing strategy can be termed as an important element. For certain tasks when the company needs to exhibit a high level of dedication in terms of engagement and employee engagement, the strategy for pricing embraced should be such that it benefits both the company and the client. As the cost saved by the company is high in margin, the outsourced company can work on charging a great amount of fees. Thus, the company can work on charging customized fees and offer prices to the customer as per their convenience. Thus, on the basis of talent pool, the business can work on offering comparatively less price in comparison to the competitors.

Promotion: The B2B sector is the specializing of the chosen business within which the accounting related services need to be outsourced. The company in the mentioned context harbours a positive image among the clients. The CSR related activities work on self promotional programs of the company. The company works on fostering strong bonds between clients and the customers by sharing the common interests. Successful deals, coupled with positive relations and revenue of the company are important and the trusted managers can work on building the brand image of the company through the use of word of mouth marketing (Cui, 2017, p. 72). The company in the chosen scenario is portrayed as a concerned and responsible financial organization, responsible for maintaining business and relationship with clients.

Place: The place is appropriately situated. For instance, India is termed as a capital for digital hub. The place is appropriately situated in the Asian subcontinent and well connected with the developing countries. The timing is appropriately made in understanding the functional operations of the host and outsourced company

Financial planning

Financial planning can work on providing a clear understanding about the ways the outsourcing related plans are carried out for measuring success of the chosen plan.

On the basis of the above financial statement, it can be conclusively stated that the initial step of the outsourcing is not giving strong financial results. The loss in the net profit in the first instance is negative, suggesting the fact that there may be chances of cost increase due to initial cost related to investing in business setup. Later, the business was subjected to a steady increase in profit margin.

The project cash flow provides a clear idea that the cash flow is gradually increasing. Thus, it can be clearly stated that the business in the mentioned case can be termed as one of the right ways of ensuring that the business of outsourcing stays within the expected profit margins. In a similar scenario, it can be additionally recommended, once the business sets well then the costs can be reduced by increasing the possible profit margins.

On the basis of the above table, it can be conclusively stated it is important to understand that the business is subject to possible financial growth. The break even analysis can work on providing a clear understanding about the possible financial analysis

Five year strategy for growth

The five year growth plan can be derived as follows:

The initial investment should be made while keeping the profit margin in mind. It is for the same reason the initial investment should be strong to make a strong foundation for the outsourcing business. In addition to that the employees need to be hired as per the demands of the client. The client should take up with proactive measures by engaging in meaningful conversation with the company. Thus, it can be conclusively stated that the following is the strategy for growth:

First year:

Outsource accounting related services to a greater extent to the offshore Indian cities

Be a strategic partner for the development of business under the changing industrial infrastructure.

Be a business partner with expert knowledge on the market mechanism of the service sector, coupled with ability to draw a series of intermediary functions.

Second year:

Support streamlined business succession

Concentrate on core business competencies and outsource the other activities with the use of collaboration

Leverage the Asian network as a hub for global business

Third year:

Optimise the global market of the company through high quality services

Enhance the level of sophistication within the services

Increase the level of customer satisfaction through the range of high quality services

Fourth year:

Transition to a better business structure which can work on adjusting the outsourcing related activities in a better way

Work on building an in-house accounts department, which can handle the emergency services

Change the approach to new business and their present working style

Fifth year:

Enhance the level of productivity by 35% at the end of the current financial year

Reduce the possible financial risk by 40% and ensure better profit margins for the business

Expand the business and the possible target areas for better rates of business productivity

Reference list

Bouillon, R.S. and Ponte, S.J.T., 2018. Oral Language Proficiency Level of International Business Process Outsourcing Agents. JPAIR Multidisciplinary Research, 34(1).

Charles, I. and Edgar, D., 2019. Secured Service Delivery Model for Outsourced Services in a Business Process Outsourcing Relationship. International Journal of Information and Communication Sciences, 4(1), p.7.

Cui, Z., 2017. The Impact of Switching Costs on the Outsourcing of Knowledge‐Intensive Business Processes. Decision Sciences, 48(1), pp.71-107.

Guggilla, C., Pandey, A.G., Kummamuru, K. and Shivaram, M., 2018, January. Mining entities and their values from semi-structured documents in business process outsourcing. In Proceedings of the ACM India Joint International Conference on Data Science and Management of Data (pp. 282-288).

Mann, L. and Graham, M., 2016. The domestic turn: Business process outsourcing and the growing automation of Kenyan organisations. The Journal of Development Studies, 52(4), pp.530-548.

Nacer, A.A., Godart, C., Rosinosky, G., Tari, A. and Youcef, S., 2019. Business process outsourcing to the cloud: Balancing costs with security risks. Computers in industry, 104, pp.59-74.

Otoo, M. and Drechsel, P., 2018. Business models for outsourcing fecal sludge treatment to the farm. In Resource Recovery from Waste (pp. 504-507). Routledge.

Wahby, R.S., Ji, Y., Blumberg, A.J., Shelat, A., Thaler, J., Walfish, M. and Wies, T., 2017, October. Full accounting for verifiable outsourcing. In Proceedings of the 2017 ACM SIGSAC Conference on Computer and Communications Security (pp. 2071-2086).

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