Accounting for Innovation

Does Outsourcing Change Accounting Firm Culture?

• Jody Padar & Matt Tait • Season 3 • Episode 3

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How does outsourcing affect your culture?

In this episode of Accounting for Innovation, Jody Padar and Matt Tait discuss the cultural implications of outsourcing for accounting firms. They explore how integrating outsourced teams with your in-house staff can influence company culture, drive efficiency, and enhance service delivery. The duo shed light on the importance of team buy-in, effective communication practices, and the role of proper training in ensuring a seamless cultural fit.
In this episode, you'll learn:

  • The importance of team buy-in for successful outsourcing integration
  • Strategies for aligning outsourced teams with your firm's culture
  • Best practices for asynchronous and synchronous communication with global teams
  • Effective training and quality control measures for outsourced personnel
  • Addressing data security concerns when working with outsourced staff

This episode is sponsored by SysCloud. Get a 50% discount on QuickBooks Online backup. Contact us at https://www.syscloud.com/ to learn more.

This episode is brought to you by Decimal and the Radical CPA.

Welcome to the Accounting for Innovation podcast, where we explore cutting edge strategies and insights into the world of accounting and finance. Presented by Decimal and the Radical CPA, each episode dives deep into industry trends. Whether you're a seasoned professional or a budding entrepreneur, join us as we unpack key concepts and share practical tips to drive success.

Jody Padar:

Today we're talking about outsourcing and accounting best practices and pitfalls, and we're really going to be talking about what it means to have outsourcing in your firm for your team here in the US. So our last episode, we kind of talked about what it was like, you know, culturally, to hire people overseas and how you kind of worked with them overseas. But today, we really want to focus on what does it mean to your team? How does it affect your culture here? And how do they kind of work with the team? So Matt, how does it happen here?

Matt Tait:

Well, I think this is a really important Conversation because I think a lot of the conversations around outsourcing and I'm a, uh, proponent of this. You talk about the business reasons why it's good for you as a company or as a firm or as a partnership, but you also need to talk about culturally. What does it mean for your team in the US? And this is where buy in is such an important thing. If you're going to make a business decision to do it, you need to get buy in from the team in the U. S. That's also helping. And because effectively you're growing your team and you need the culture to align. It's no different than hiring somebody in the US. You need to make sure that they're going to fit with your type of culture. And I think a lot of people just think of it more as an asset addition rather than a cultural addition. And I actually have a really good example of this. A couple of years ago, we bought a company from KPMG. And for a lot of tasks, they were using college kits. And it was great. It worked out really well for them. From a cost and quality standpoint, our model was much more to use people in the Philippines. Before instantly switching everything and doing it, we spent a lot of time with the remainder of the U. S. team talking to them about the benefits, allowing them to get to know some of the staff from the Philippines, and effectively getting their buy in for the type of work. And it made that integration and that flip much, much smoother and much, much better long term.

Jody Padar:

Yeah, I think it's so important because I think Like anything else, if you're going to jump into this and you don't have buy in, uh, your team is gonna maybe not intentionally make it fail, but make it fail

Matt Tait:

because

Jody Padar:

they're just not like it's not their priority or they don't see the value in it for them. So maybe they don't set out to make it fail, but they don't really set out to make it succeed either. And so by not setting it out, setting out to make it succeed, it just kind of fails because. Like, nobody cares. And so I think it's really important as we talk about this is how do you make it successful overall and what does that mean for your team?

Matt Tait:

Well, and I think this is where it's just like when you hire a new group of people, if you were going to hire those college kids, you would have to really, to make that successful, you would think through like, how are we going to use them? What are they going to do? Who is going to oversee that? How are they going to work with person X, Y, and Z? And You have to think about the same thing with outsourcing and with hiring those people in other countries is how is the work relationship going to go, who is going to do what? How are they working together? How are they overseeing things? And that's also just thinking through how do I put people in a position to be successful? Because like you said, if, if you have a team that doesn't have full buy in, even if they do, if they don't know what to do, they're going to struggle on how to do the next step. And so you have to think through, how do I position this to be successful?

Jody Padar:

And I think you need to think about like all the pieces of it, right? So there's like the Slack communication and the cultural things that we touched on last, last episode. But I also think, what's the expectation of this team communicating with the other team? Do, do their hours cross over at any time? Right? Like I've worked with global teams before and we used to have our standups at like 10 a. m. And everybody had to be there and yeah, it was 10 a. m. for us, but whatever time it was for them. Right? Like, so, and is there an expectation that they will work together in sync at any time versus async, right? Cause. Again, there's no right or wrong answer, but it's how you're going to manage all of this work and how your team wants to effectively work with the other team or the extension of your team. Right. And so I think these are the, the tactical things that people don't think about, right? It's not until you have a global team, then you're like, Oh, wait, Well, like if we want to meet at 10 a. m., that's 10 o'clock their time at night or whatever time it is. And is that really the right time we should meet? Or like, you know, it's like kind of the silly, stupid stuff, but that's the stuff that actually makes a big difference when you're trying to figure out how to get the team to work together.

Matt Tait:

Well, and all right, let's throw this out there. The two most popular outsourcing locations in the world for accounting are India and the Philippines. period. Those are the two most prevalent currently today, which means that they are about 12 hours behind 10 to 12 hours. So your first decision is, am I going to hire them on night shift or am I going to hire them on their day shift? And if you're going to hire them on their day shift, which is your nights, has your team ever worked asynchronously? Think about this. You have work that requires input. So your team in the outsource country has a question. Somebody wakes up the next day answers that question. Well, that question isn't answered till another 24 hours. You have a 48 hour turn on that question, and you have to think through that when it comes to asynchronous work and time framing. And so what is the best decision for you? And I can tell you that there are plenty of companies that have successfully done asynchronous work. And there are plenty of companies that have hired night shift. So it's just a matter of what is going to work for you.

Jody Padar:

Right. And I think that's really important. It's just like, what's, what's the best practice for your firm. It's not one or the other, and one is the right way. And one is the wrong way. It's just, you know, what works. overall for how you work, right? Because there are, you know, there are firms in the U. S. that still make their accountants sit at their computer from nine to five because they expect availability to get work done. And like from when I had my firm, I used to have stay at home moms working at four in the morning or five in the morning. And like we never, we were always ASAP. And like, then, you know, there are still firms that are like, Oh, if they're not on teams from nine to five, I can't work with that person. Right. So it's

Matt Tait:

just, it's

Jody Padar:

just what, what the expectation is for your culture. And again, there's no right or wrong answer on it.

Matt Tait:

So it's interesting because culture and this communication we've talked about actually is a really good lead in to quality control. And I'm interested, Jodi, what have What do you think people should consider when it comes to managing quality of output, quality of work in an outsourcing type relationship? Cause that's also communication based.

Jody Padar:

So it's interesting to me too, because it depends on how you're hiring people. Because if you have like just a regular team member sitting in an office in the Philippines, but they're part of your team, you may have. Like, it's just like a one on one relationship, right? But if you actually outsource something and there's like a process around it, a lot of times there's a QC over it before it even comes back to you. So it depends on like the type of outsourcing you've done with like your outsourcing company. Right. Um, but I would think. If you're truly hiring a person who is an extension of your firm, and they're just sitting in an office somewhere globally, that you need to train them just like you would train another person. And now, you know, we all know that. Things get like people get busy. And so they just like fix a mistake and they move on. And sometimes it always doesn't get communicated back to the other person. And so they continually make that mistake because, gee, you never told them they were doing it wrong. Right. But that's just poor training overall. That doesn't matter where the person's sitting. Right. But I, I think that's like, again, you have to be intentional about training this person. Um, because otherwise your QC is never going to like improve. Because you didn't train them.

Matt Tait:

Well, and I think that's one of the hard things for a lot of particularly smaller firms, but I would even say bigger firms that test out outsourcing. There is an assumption of, Oh, the quality is going to be there. These I hired high up and even the cost structure is a third of what I pay somebody in the U S like, I don't need to worry about quality control. That's just wrong. You have to think about the entire work stream from beginning to end and putting people in a position to be successful. And if you view it in that way, also if you view an outsourced hire as equal to a U. S. hire, That will help you think through how do I train and teach?

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Jody Padar:

Well, and I also think you have to back up here where you think most firms, smaller firms, especially really have no documented processes and no SOPs. So like, if you don't have any of that, It's very hard to train a person sitting next to you, much less train a person in sitting someone 12 hours different. Right. Yes. So I think we got to like kind of step back for a minute and say, okay, what are we really training? And like, do we have to start with systematizing and, and kind of putting processes around the work that we do internally? And, and you can do it with an outsourced person as well, kind of do it like concurrently, right? Like as you figure it out, but that's just good business that has nothing to do with like whether they're outsourced or not, but in most firms it's, it hasn't been done. It's all in the partner's head. It's all in the manager's head. No one has, because like you don't have time, right? Like you're so busy doing client work. You forget to document it. Like, and so the reality is, is you as a business owner have to step back and say, look, if I want to build a business, And not just be a solo practitioner or not just kind of live on a whim because if that person gets sick, like then who picks up that work anyways, and you have to hire a new like person immediately. That new person knows nothing of what the old person did anyways. Right? So that's kind of like the redundancies that small firms have to really think about building into their practices. That Maybe they haven't thought about in the past or maybe they haven't focused on the past, but they have to start at least a little bit at a time. And I think that the thing about it is today is it's a lot easier to do today than it was five years ago, right? Like the, like Loom and Scribe and all those tools make it very easy. Easy to do a lot of that documentation that in the old days, you used to have to hire a person full time to figure out how to document process. And today, you know, you can spend 10 minutes and get something documented pretty quickly.

Matt Tait:

Yeah. And let me, let me actually throw a little flip side on that. Cause. What I just talked to a brand new firm owner the other day, and he was thinking about do I hire some my first hire need to make my first hire? Should it be in the Philippines? Or should I hire somebody in the US? And I said, Hey, either way, do the documentation, do all this stuff. If you can, he goes, I need somebody now. I was like, okay. Well, number one, you're going to really suck at it the first time. We all do. We're none of us are very good with that first hire. We get better every time. It is more cost effective for you to hire that first person in the Philippines and to work through all the stuff that you need to do than it is to hire somebody in the U. S. So your risk profile in that first hire. I said, just go hire that person. If you're overwhelmed, go hire that person, but document because you're going to end up hiring more and it'll be easier the next time. But I said, your risk profile is much lower if you hire that person in the Philippines to help you than it is the U. S. staff person. Also, it will go a lot quicker because it's really hard to hire in the U. S. right now.

Jody Padar:

For sure. For sure.

Matt Tait:

So one of the things that I'm interested in your opinion on, Jody, that, I think a lot of people struggle with is communication person to person, U. S. team versus the outsourced team. What are some of the ways people can improve communications between team members in other countries that can benefit the firm or company as a whole?

Jody Padar:

Well, I think it has to do with having set times to communicate. So whether it be a daily standup or every other day or whatever, you know, get that consistency and meeting times and actually talking with them. Because again, a lot gets lost over Slack and it's, it's, it's not intentional. Um, but it happens. Um, and I think it's about consistency and it's about. Making sure that you're one team, right? So like, um, you know, depending on how your teams work together in, on various projects is maybe it's having the same, just like in the U S you'd have like the same three people working on a project, right? Well, again, if you're going to have three people on a project, you know, it's. Uh, two people from the Philippines and one person from the US and, you know, make sure that they're, because like anything else, some people like some people, other people like other people, right? Some people get along easier. So, so, you know, not everyone is everyone's cup of tea. So like, yeah. You know, you want to make sure that your team members can get along and they need to develop deeper relationships. And the only way that's going to happen is by kind of facilitating those relationships.

Matt Tait:

You know, one of the other things I would say is that one of the first things we did, uh, when we reached three people in the Philippines was, uh, we put on a remote cultural event. I think we played a game of Pictionary and we included them and it was just, I think shared work, by the way, bonds people together and builds relationships better than anything else. But it goes a really long way with your outsource team if you're effectively paying them for an hour to have fun with your team. That is a really good cultural thing that they aren't used to that can help bond them to you and help make it easier for your teams to bond together is just simply doing random things that can help. And there's one company we used, I think, called Confetti. And, uh, they help with remote events and that's been a great way to help bond the teams together, uh, is through just doing that every once in a while and being a good person along those lines.

Jody Padar:

You know, with working with remote teams, regardless of if they're overseas or not, one of the things that we found, um, helpful is, uh, just opening up, um, like a zoom meeting and working side by side, even though you're not talking as you're just kind of hanging out in an office together online. And, you know, say like for two hours on Thursday afternoon from two to four, come join me in the hangout and work on your work together. And I think that that goes a lot to culture building as well, regardless of it. Your teams are sitting overseas or not. And I, I thought it was kind of funny when we started doing it. But like, um, I'll say that the younger generation is used to like, just kind of sitting side by side, like in zoom meetings, like, and they enjoy it. So regardless, I mean, that's just a remote team thing that I found like, kind of, I'll say silly, but everybody seems to love it. So, but again, if you're sitting by yourself all day and it's one thing, A little bit off topic here, but it's one thing if you're a leader and you're in meetings all day versus someone who's doing, um, more tactical or work all day, those team members don't get the social interaction that happens if you're in meetings all day. And so for them that, you know, a couple hours a week is actually, you know, exciting.

Matt Tait:

We talk a lot about how in and out in a company that is remote only people start and end their day on an island and it's our job to build bridges and so we talk a lot about how do you build bridges and how did you today and I think that's important remote outsourced etc. So, Jodi, pivoting really quickly, there's one concern that I hear from a lot of accountants and I'm interested in your thoughts. Data security. What are the worries? Should they be worried? Are there concerns? What do you think?

Jody Padar:

So, you need to be data security concerned about wherever your team member sits. It doesn't matter. It's not an outsourced thing, like whatever. Um, you definitely have to make sure that whoever you're using, Um, Um, you know, has like kind of gone through that audit, right? I would say most of the, the out, the, I'll say the legit outsource providers, right? Um, I'm sure there's some sketchy ones, but the legit ones, and a lot of them are spending a lot of money marketing. So like you could find them pretty easily. They have like crazy security concerns where like, Um, the people can't go in with their cell phones, right? Like they're kept in lockers, right? Like they're way more secure than we are in the U.S and just walking into an office and putting your laptop on your desk, right? So, um, you definitely have to do your due diligence, but I would say that the majority of companies, as long as they are a solid outsourcing company, have a lot of Uh, way more security than I would say probably the person you sent a laptop to who's working in their home office.

Matt Tait:

You are 100 percent much more likely to run into a security issue related to a U. S. employee than you are a, an outsourced team member. I'll also throw this, all of our team members are remote. period, even in the Philippines, even in the four other countries where we have employees. So they work from home. There are ways that you can make devices secure as well. Uh, Rippling does a good job. Apple has some stuff. there are plenty of ways that you can secure data through software. And make it an effective tool for you. And it's just a matter of being intentional about it. But I do think a lot of the old school of security concerns. The other thing is I have yet to be asked by a client about the data security of our team in the Philippines. I've been asked about my SOC 2 compliance and all that stuff, which is included in it. And that's fine. Client to client on a individual engagement basis, it literally has never come up.

Jody Padar:

Well, and I think what is different today than was like, um, I'll just say even like five or seven years ago is. All these smaller providers who have the sophistication, like rippling, like you said, who really can do a lot more like data security. So it's not like you have to figure it out yourself. Whereas I think that's like a misconception. It's like, Oh my gosh, I don't know how to do data security. How could I even begin? There are so many providers who can do it for you. So. So you don't have to worry about it. Right. And they know how to keep the data secure. So it's just a matter of connecting with that provider.

Matt Tait:

I agree. I mean, the reality is outsourcing is here to stay. It is a great leverage point for businesses, and it provides great opportunities. You shouldn't be afraid of it. And there are a lot of tactical things and people that can help you to be successful. Learn from those of us that have made mistakes, and there are plenty of people that are more than willing like me to share. And I think it's just one of those things that's, it's the new normal.