- CA Deepak Rao is an Audit Professional turned entrepreneur.
- In 2022, after two decades of working with the Big 4s, he waved goodbye to the title of Audit Partner and said hello to Deepak Rao & Co.
- He says the accounting and tax outsourced industry in India presents a huge opportunity.
Unlocking the global shift
The US is like a superhero struggling to find high-quality talent, manage overhead costs, and maintain profitability despite a growing economy.
Why? Profit margins are shrinking and there is a need to reduce costs.
The answer? Drumroll, please… India! MNCs are flocking here, realizing we’re the talent goldmine they’ve been searching for.
They are seeking experienced individuals whom they can trust and partner with.
Big 4s and other giants are also in the game, with Global Capability Centres sprouting across India like mushrooms.
But guess what? The US offshore and outsourced market is only 20 to 25% tapped. Several mid-sized CPA firms are now considering setting up an offshore office in India or outsourcing to an Indian firm.
If we have a look at the UK, again the opportunity is huge!
I have worked with PwC UK for almost 5 years and I am always asked about offshoring and outsourcing to India.
All the major firms including the Big 4 or Big 10 in the UK have shut down many of their regional practices.
Why? Because they’re not able to manage the drowning work and meet compliance requirements, and quality standards with the current cost structure.
Thus passing on a lot of work to the local small and medium-sized CA firms in these regions.
Good news for us – they’re outsourcing/offshoring more to India (and the Philippines). Cheers to that!
Types of clients
There are two types of opportunities.
One is serving CPA firms in the US or the CA firms in the UK, and the other one is serving companies directly in the US and UK.
- If you want higher profit margins, then approaching US / UK companies directly is the right move.
- However, you should be aware that obtaining work directly from clients is not as easy as acquiring work through CPA firms.
- First, try to understand your client’s needs and concerns, then, accordingly offer a solution that aligns with their requirements.
- Don’t force your services onto them, a lesson we learned in the process.
Most in-demand services
Accounting Services are currently in high demand, reflecting the current trend in service preferences.
US Tax work is another specific service that has a notable demand.
However, getting Audit assignments can be tough as CPA firms and clients in the US approach audit work with heightened caution and discernment.
To maximize opportunities, focus on tax-related tasks in the US, and explore both the UK and US markets for delivering top-notch accounting services.
How to acquire clients
Trust – the magic word.
In addition, this is how you can secure clients:
Collaborate with other outsourcing firms
Since you are just starting and lack the necessary credibility, collaboration matters a lot.
My advice would be, to learn from others in the industry and understand how to identify potential clients.
Collaborate with digital marketing companies
Connect with digital marketing companies that specialize in serving CPA firms.
Numerous agencies in the US cater to CPA firms, which you can find with a simple Google search.
Many of these agencies have YouTube channels and LinkedIn profiles where they showcase their client lists.
Try to approach at least 20 of these firms and you will find the one who would like to collaborate with you.
I have been using LinkedIn to establish connections with CPA firms. We found our first client through this platform.
Crafting competitive pricing strategies
- Set your initial pricing based on costs, with salary expenses typically constituting 40 to 45% of revenues and an additional 10 to 15% allocated for overhead expenses.
- In the competitive offshoring market, where rates have shifted from $10 to $8 per hour in the past year, flexibility is key.
- For complex tasks, consider rates of $15 per hour, and for those with a proven reputation, trust, and credibility, premium rates of $25 to $30 per hour may be achievable.
- India has a mature US Tax and Accounting talent pool however those with expertise will come at a higher cost.
- Talent is becoming an issue due to the rise in offshoring and outsourced accounting and tax firms in India.
- Training individuals for US Tax Services can pose significant challenges.
In the past, companies and US CPA firms have encountered fraudulent entities from India posing as legitimate firms.
To build trust, I recommend urging potential clients to thoroughly scrutinize your background and LinkedIn presence.
Offering a free pilot project can further establish trust, and once clients experience your services, your reputation is bound to spread like wildfire.
Sustained inflation, a stable government over the past decade, and the favourable demographic profile of India make us an ideal market for serving countries outside of India.
Moreover, countries like Japan, with an ageing population, and the UK facing immigration-related staff capacity issues, present significant opportunities for offshoring firms in India.
To all CA Firms, if you want to go big in the outsourcing space then a strong focus on marketing, branding, and advertising is necessary.
As a CA Firm, you cannot advertise and thus you will need to hand over your COP (Certificate Of Practice) and then proceed with the new venture as directed by ICAI.
It’s a great time to be an entrepreneur.
Don’t wait for the right time, as the right time is now. You’ll have an opportunity to create jobs and set your own culture for your team.