The human brain can only hold so much information. Although our memory capacity is prodigious – around 2.5 million gigabytes, which is equivalent to roughly 3 million hours of television – we can still only be in one place at a time. More to the point, everyone is limited in the number of tasks they can juggle … if they want to do them well, at least.
Most companies do want to do everything well, is the thing. Which leads to the question of whether you’ll hire more people to get the job done, stay up late at the expense of your own sleep, or find another way.
If “another way” sounds like the most appealing option to you, you’re not alone. That’s why so many people are outsourcing to the Philippines and other places. In addition to making life easier, outsourcing accounting and other functions also has high-level benefits such as cost savings and increased efficiency that stem from economies of scale.
For this reason, companies are increasingly choosing accounting outsourcing services as a way of getting more done on a smaller budget. Statistics are clear on the subject: “of the 6.7 million total jobs America created in 2021, approximately 95.5 percent of them went to Americans and 4.5 percent were outsourced.”
The Philippines are a place where outsourcing is growing particularly quickly, because Filipinos have both the technical knowledge and the language skills to provide excellent business process outsourcing (BPO) services to other countries. This shows in the numbers as well.
“In 2000, the BPO industry accounted for a mere 0.075 percent of the country’s GDP, which has grown exponentially since then,” says Colliers, adding that “the industry contributed at least 7 percent to the Philippine economy during the pandemic.” In 2021 alone, the Philippines’ BPO revenue climbed by 10.6 percent and represented a 9.1 percent jump in headcount (i.e. the number of people working in the field).
While statistics such as these make it clear that outsourcing to the Philippines is a good idea, however, they’re missing one important point: choosing any old BPO provider can sometimes feel as arduous as simply doing the work yourself. That’s why it’s so important to work with a partner in picking the right company.
Before we get to that, though, let’s discuss the main reasons companies outsource work, what types of accounting tasks you should consider, and why the Philippines in particular is a good way to go.
There are several reasons why companies choose to outsource. While the Philippines is especially popular due to its language facility, widespread literacy and education, and technology fluency, many countries offer benefits from outsourced accounting services.
These benefits include, but certainly aren’t limited to:
So exactly what types of services can you offload? Let’s take a look.
While it’s possible to find an outsourced team to help with almost any administrative or back-office service, accounting is one of the most popular sectors to send abroad. It takes boatloads of work off your plate, freeing you up to focus on your core competencies, but costs much less than if you were to pay for in-house management accounting staff.
Among the most popular services to outsource are:
Overall, if you have accounting tasks, then there are people who can help you. Now let’s turn our attention to why the Philippines is such a good way to go.
Outsourcing to the Philippines, whether that’s for call center work or accounting services, brings a lot of benefits to the table. Language ability, the specialized workforce, and government approach are three of the most salient.
Most Filipino citizens speak English and Tagalog fluently. They often speak a third or fourth language as well, such as Mandarin or Spanish. This is helpful, because you want your offshore team to be able to assist anyone from your organization, or outside it, with general accounting or financial reporting needs.
Before you sign up to work with a company, think carefully about what languages (other than English) you’ll want your outsource partner to be able to speak. Then ask them in the interview, or work with an outsource matchmaker to find the exact language skill set you need. (More on that below.)
Filipino natives receive significant public school education that meets or follows most U.S. schooling requirements. In addition, the government has created industry-specific outsourcing education programs for students to attend in high school and college, to train the workforce for outsourcing roles across a series of industries after graduation.
Although call centers do figure highly in the skill set of the Filipino talent pool, that’s far from all of it. The country also produces certified public accountants (CPAs) and other accounting professionals, as well as graphic design specialists, administrators, and HR experts. Whatever services you need, you can find a high-quality provider in the Philippines.
There exist many lobbying organizations for different outsourcing industries within the Philippines, helping to ensure that the country is growing this sector all the time. Plus, the country has built solid infrastructure – including roads, cities, internet, and other technology) – and huge outsourcing hubs. These are located in Manila, Cebu, Davao, Bacolod, and Iloilo, among others.
Moreover, you won’t pay more for accounting functions and financial services than you would for any other industry, even though it is financial in nature. The Philippines and US have a tax treaty, meaning that they avoid double taxation for money generated in either country by people in the other. That means Filipinos will be happy to take on your accounting tasks at a lower rate.
The following challenges are prone to any outsourcing arrangement. However, with preparation, they can usually be avoided or mitigated.
Expect cultural differences in any outsourcing arrangement. For instance, workers in the Philippines have very strong family ties. Although they’re hard workers, you shouldn’t be surprised if your outsourced employees suddenly have to take time off to handle family emergencies.
Note also that in the Philippines, the word “family” goes beyond the immediate household. For example, it might include a sibling’s spouse’s cousins. If you bring people on board whose culturae dictates state that they must help any family whenever they need it, then you must expect that they will sometimes avail themselves of their ability to do so.
For that reason, plan to have enough staff that you can cover the tasks of someone when they’re out. The American paradigm of working to the exclusion of everything else won’t fly here.
People in America and Europe have a highly developed sense of individuality, whereas workers in the Philippines and many other Asian countries focus more on the needs of the group. For that reason, Filipinos often avoid confrontation when they sense a need in others.
The downside of this is that Filipino workers may take on additional tasks or accept short deadlines even when they’re understaffed. Ditto when they don’t have the knowledge, expertise, or experience for a job … and simply because they don’t like confrontation and saying no.
This can cause misunderstandings, so be on the lookout and make sure your outsourced workers are comfortable and staffed adequately to handle the work you provide them. Otherwise, everyone will feel frustrated on both sides.
The Philippines has great infrastructure and is quite secure. However, the nature of accounting and financial outsourcing is that data needs to be highly secure, otherwise your clients and customers may lose trust in you … or even sue.
For that reason, parent companies that outsource work may need to share logins, software licenses, and so forth with the workers providing their bookkeeping services. It will require training and trust to move your accounting processes from a full-time, in-house paradigm to one that is overseas.
The results, however, are worth it. If you manage to address the above concerns, you will reap so many benefits in terms of cost-effectiveness and time management. Now all that remains is to find the right outsourcing provider for you!
The Philippines’ multilingual capabilities, highly skilled and specialized workforce, and outsourcing-friendly infrastructure and government policies make it an amazing place to find the right outsource partner.
Despite challenges such as cultural differences, varying approaches to confrontation, and some data security concerns with which you’ll need to take care, it is still a cost-effective BPO destination. Whether you need help with payroll, accounts receivable, financial reporting, or number-crunching, outsouring providers in the Philippines have you covered.
That’s assuming you find the right service provider in the Philippines, of course. Rather than doing your own research on outsourcing to the Philippines, we strongly recommend you work with a knowledgeable partner to find an outsourcing company that works for you. That way, you can make sure you’re getting the right experience and pricing, ensuring the accounting outsourcing services you ultimately choose will work in the long run.
TDSGS is here to help. We have more than 30 years of experience matching businesses just like yours to ideal-fit outsource partners in the Philippines … and everywhere else. With thousands of contacts in every field of outsourcing, all around the world, we guarantee you’ll get what you need.
Want to learn more? Reach out today!