Who Files Your Tax Return?
Sometimes I meet small business owners who don’t think outsourcing is for them. They prefer to be able to see their staff in order to monitor their attendance and chat face-to-face and can’t imagine the issues involved in managing staff in a different location.
It’s a common view; even when I was a senior director for a global investment bank, located overseas and managing staff in two offshore centres, I encountered “line of sight” managers. When something significant happened at Head Office, ex-pats were recalled to join the All Staff Meeting, to assist with staff management issues, or to deal with an emerging crisis. For managers unaccustomed to having staff in a distant location their lack of on-site presence posed challenges resolved through a high travel budget. If large corporations experienced at offshoring encounter obstacles, it’s no surprise that small business owners find the concept challenging.
Other small businesses have consciously embarked on the journey to outsource specific full-time roles, and some are engaged in a form of outsourcing without naming it. They may engage a marketing firm to refresh their website or manage their social media; they may have an IT support person that is called when issues arise, and they most likely have a bookkeeper or accountant filing Business Activity Statements and Annual Tax Returns. These services are purchased on an outcome basis – “build me a website”, “manage all the financial aspects of my business”. The company fulfilling these services may well be back-ending them into an offshore business such as mine in order to remain competitive.
In a recent recruitment exercise for a Melbourne based client, I was surprised to find there are a large number of qualified accountants and CPAs here in the Philippines completing mandatory business documentation and tax returns for Australia as well as most other 23Western countries. They have experience with MYOB, Quickbooks and Xero and have mostly been working for Australian accountants who service small businesses, with some working directly for these businesses.
The discovery of the proliferation of outcome based outsourcing led me to consider my own business model, which at that time was 100% based on providing full time resources with specific skills. Our clients choose to do this not just for the obvious cost savings they can achieve, but for broader coverage of support hours, or to access hard-to-source skillsets, or just to tap into a wider pool of talent. But some of the clients we speak to aren’t quite ready to take the plunge, so providing outcome based services enables them to get a taste of how we operate. In evaluating potential clients’ concerns, we created a secondary model of service provision that offers more ad-hoc and project based deliverables.
Businesses that shift smaller outsourced activities from a high cost location to a reputable service provider offshore take a step towards making a more strategic change in their organisation’s resourcing model. On a small, manageable scale, the issues associated with dealing with a different culture in a distant location and different communication style are shown to be non-issues. With excellent infrastructure and the ubiquitous use of Skype and Instant Messaging tools, managers and business owners can build the same strong relationships and achieve the same results with their offshore staff and partners as those sitting right next to them in the office.
Small businesses need to constantly review their operating models and respond to changing customer needs and shifting market conditions. Remaining agile, responsive and innovative is crucial for success.