27 Nov 2023
by Rishab Lodha, Ninal Joseph

Outsourcing success: Top 10 key considerations

MSI’s Bangalore member firm Lodha Bhatt highlights key considerations and planning steps for those embarking on an outsourcing partnership.

This article, the second in the series by Lodha Bhatt, follows our previous article, 'Why is Working from India (WFI) the new trend in CPA firms?,' which discussed the benefits and common concerns of outsourcing.

Embarking on an outsourcing partnership requires careful consideration and strategic planning. Follow our Top 10 key considerations to navigate the complexities of establishing a successful outsourcing partnership:

  1. Risk assessment: Before partnering with external entities, conduct a thorough risk assessment. Identify data sensitivity, vulnerabilities, and evaluate the partner's security measures using frameworks like NIST, ISO 27001, or SOC 2.
  2. Clear agreements: Define roles, responsibilities, data scope, security standards, and reporting mechanisms in clear agreements. Include clauses on data ownership, retention, deletion, breach notification, and liability.
  3. Provide access through secured VPNs: Firms can choose to keep the data in their servers and provide restricted access to their outsourcing partners. Staff members of the outsourcing partners login through Remote Desktop software, work on the files, all while the data remains in your server.
  4. Use cloud technology: Where practical, provide login IDs to staff members of outsourced service providers, most software maintains an audit trail of each login ID and provide details regarding their activities on the tool. Restrict downloading information and keep the data on the cloud.
  5. Invest in training: To avoid Garbage In Garbage Out (GIGO), make sure your managers spend time training your outsourced partner. If you’ve got a good partner, it’s a one-time investment. Trainings help in setting expectations, help the team get comfortable with each other and eventually results in a no-surprises delivery on projects. Most outsourced partners don’t charge for trainings, make the best use of this time.
  6. Do a proof of concept: A POC is an experiment that should be done when you are not operating at peak capacity. The POC gives you time to understand what is working with the outsourced partner and what isn’t.
  7. Set a budget: Say you spend USD 100K to hire a resource, set that budget up for an outsourced partner to begin with. If all goes well, you’re set to save a lot of dollars and if it doesn’t, it’s just one bad hire.
  8. Communication: Communication is key to the success of any remote team. Have an effective two-way communication between the teams and do give feedback. Have a debrief call after new projects and understand your partner’s experience on the project. Sometimes a new set of eyes on a client can bring great value.
  9. Look at manhour intensive jobs: The cost arbitrage that comes along with your outsourcing partner is unreal. Those bleeding projects can suddenly turn profitable and free up critical man-hours for more demanding tasks. Review your ongoing projects to identify these manhour intensive jobs.
  10. Strengthen your business development team: You’ve just added more capacity to the firm. Your staff is generally freed up within 2-3 months of the transition to take up more work. Use them effectively to add more value to clients, or to service newer clients.


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