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Finance and accounting are at the core of every thriving business. Traditionally, companies were dependent on in-house teams to manage their bookkeeping services and financial management. However, as costs rose and skilled professionals became harder to find, businesses began outsourcing these tasks locally, a practice known as local outsourcing.
The next major evolution came with the rise of offshore outsourcing, a game-changing strategy that allows businesses to leverage global talent and reduce costs without compromising quality.
Let’s understand how this model has revolutionized industries globally.
Offshore outsourcing is the practice of transferring non-customer-facing tasks, such as finance, accounting, and bookkeeping solutions, to professionals located in various countries. It combines the concepts of “offshore” (geographically distant) and “outsourcing” (contracting tasks to external entities).
This strategy emerged as businesses pursued efficiency and cost reduction. Offshoring allows companies to focus on core competencies while entrusting repetitive or specialized tasks to skilled teams abroad like outsourced accounting bookkeeping services.
The result?
Better productivity, simplified operations, and huge cost savings.
Offshoring isn’t just about saving money—it’s about reconsidering procedures. By outsourced bookkeeping services and other recurring tasks, organizations can restructure their systems and remove inadequacies. This approach has permitted many businesses to modernize and concentrate on their core powers.
Case in Point:
Back in the early 2000s, the World Bank relocated its finance back-office functions from Washington D.C. to India. This shift saved costs as well as eliminated an accumulation of expenditure forms and accounts-payable items, indicating the transformative mutative potential of offshoring.
Even today, giants such as General Motors, BP, and Citigroup use offshoring to take care of finance and accounting roles. As per a 2023 report by Everest Group, the global finance and accounting outsourcing market will accelerate at a CAGR of 6.2%, reaching around USD 5 billion by 2025. Of this, India emerges as a dominant player, acquiring approximately 50% of the market share.
Offshore outsourcing poses many advantages that make it an appealing alternative for companies. According to Deloitte’s recent Global Outsourcing Survey (2023), the leading drivers are:
Summary: Offshoring is a planned and economical method to perform business tasks, improve expertise, and progress bottom-line performance, all while continuing operational control.
The offshore outsourcing transformation has accorded two main workforce trends: the gig economy and the growing pervasiveness of remote work. Together, these trends have restructured customary employment models, making offshoring more feasible and consented.
Another prominent development is the emergence of virtual companies, which work without physical office spaces. These companies depend completely on remote teams to handle their operations, a trend gaining traction globally.
Despite these developments, many SMEs are hesitant to offshore their finance and accounting operations. This hesitancy often emerges from issues regarding trust, proficiency, or the worry of losing control. However, connecting with a qualified offshore team can change these sensed challenges into growth opportunities.
India has been the chosen destination for finance and accounting outsourcing and for a good cause.
India’s finance and accounting offshoring market was valued at USD 35 billion in 2023, dominating nearly 50% of the global market, as reported by HFS Research. The market will thrive at a CAGR of 7% through 2026.
Important factors pushing India’s domination comprise:
Additionally, government initiatives such as the Digital India campaign and infrastructure developments strengthen India’s position as a global offshoring trailblazer.
While offshore outsourcing presents clear benefits, it is important to tackle common issues to make an intelligent decision:
Offshoring is no longer just a cost-cutting instrument; it’s a tactical enabler for companies aspiring to prosper in a competitive global environment. As the gig economy develops and technology links geographical gaps, offshoring will play an even greater role in determining the future of work.
Key Takeaways:
So, what’s stopping your business from extracting the true ability of offshoring?
Partner with Clarigro, a dependable outsourcing bookkeeping services and other services today and revolutionize your finance and accounting procedures into a strategic benefit.
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