AMERICAN FIRMS USING INDIAN CAs
Workload shortage of Accountants forcing American firms to Outsource work. After doctors, lawyers and engineers Indian CAs are trouble shooting for Americans now. Shortage of good Accountants there is leading to outsourcing of tax returns to India. This year 3.6 lakhs U.S returns were prepared in India and the numbers are growing.
Outsourcing of accounting and audit services is gaining strength every year. Business in India booms during tax season. But unlike other services which are mostly outsourced due ti higher cists the demand for returns off shoring is mainly due to lack of Accountants and excessive workload. It is seasonal in nature. Demand peaks during March, April and August & September every year.
The number of CPAs (Certified Public Accountants) and other qualified Accountants in the U.S is not enough to meet the demand. In fact the demand supply mismatch has led to severe competition for experienced accountants. Salaries are sky rocketing.
Accountancy firms are discovering that offshore returns are not only turned around faster but are 40-60% cheaper. Perhaps thatâ€™s why other kinds of accounting work too are being off shored to India like book keeping financial statements analysis etc.
The industry will quickly move beyond. Both vendors and buyers are at an inflection point on the maturity graph and we expect tax return preparation will drive penetration into a wider range of off shored professional services.
There are about 1.3 lakh CAs in India and three times that number are in the pipe line. Experts say that they can train Indian CAs quickly to be familiar with US tax laws. An Indian accounting BPO feels they have an advantage over corporate vendors as they speak the same language as their CPA counterparts in US. The latter are bound to trust Indian CA firms more than tch companies because of their common accounting background.
However there are caveats. Indian vendors do not have enough team utilization during the non-tax season. They need to widen their range of services into other areas of accounting and spread to other geographies. There is also growing unease in the U.S about availability of qualified talent in India to sustain current growth levels. Vendors might find it difficult to attract employees for tax preparation, which requires specialized knowledge.