Offshoring and technology in accounting firms are increasingly being used together to address capacity and efficiency. But simply adding offshore staff or new tools does not guarantee a more effective operating model.
In the latest episode of the INSIDE Public Accounting Podcast, Chelsea Summers, executive director of INSIDE Public Accounting, and Rob Brown examine whether firms are actually redesigning how work gets done or layering new people and technology onto existing processes.
Offshoring Adoption Is Growing Faster Than Its Workforce Share
About half of participating firms use offshore FTEs, with an average of 5.4 offshore employees per firm. Among firms already offshoring, 56% plan to increase their use next year, while only 11% expect to scale back. Yet offshore employees account for just 2.6% of total personnel across all firms.
That gap suggests many firms are still using offshoring primarily as an additional source of capacity rather than rebuilding their staffing models around it.
The economics help explain the appeal. Personnel costs account for about 49% of net revenue across firms. Offshoring can help firms manage those costs, particularly for high-volume, lower-complexity work that does not require direct client interaction.
But adding lower-cost capacity does not necessarily change how work moves through the firm.
Technology Adoption Tells a Similar Story
The same pattern appears in technology.
Office applications and research tools are more than 90% cloud-based, while client portals are at 89%. Adoption drops for systems closer to the engagement workflow, including practice management at 71%, billing at 69% and audit at 61%.
Those systems tend to require more than a software change. Moving them often means reconsidering how work is scoped, staffed, reviewed and delivered.
“Adoption numbers sometimes look more impressive than the actual changes in how the work is getting done,” Summers said.
That distinction matters because firms can invest in new systems without removing steps, handoffs or costs from the old process.
Redesigning the Workflow vs. Layering On
For firm leaders, the more useful question may be whether the workflow itself has changed.
Did the firm change how work is scoped and staffed when offshore capacity was introduced? Did review points change when new software was added? Or are the same steps still being performed by different people or through different systems?
If the underlying process remains unchanged, firms can end up paying for new technology and offshore capacity while retaining the same complexity they were trying to reduce.
Summers said that risk increases when offshoring and technology are treated as separate initiatives with different leaders, budgets and timelines.
“The technology should be what makes the offshore team effective, not just a parallel project that happens to be running during the same times,” she said.
Start With One Accounting Workflow
The challenge may be particularly important for midsized and smaller firms that do not yet have the infrastructure to manage large distributed teams.
Rather than trying to redesign the entire firm at once, Summers recommended starting with one process, such as audit workpaper preparation or a specific type of tax return. Firms can then reconsider the handoffs, review points, staffing model and technology supporting that workflow.
Her recommendation for firm leaders is straightforward: choose one workflow this quarter and map it from beginning to end, including every handoff, review point and tool.
Then ask whether the firm’s investments in offshoring and technology have actually changed that map or simply added another person or system to it.
For firms trying to improve both capacity and margin, the distinction matters. The value of offshoring and technology comes not only from adopting them, but from redesigning the work around them
