We recently had a group of Australian accounting directors confide in us their top 12 outsourcing fears.
As conveyed to Odyssey, here are the top 12:
1. Ethical issues. Is there going to be a lack of support from other directors, staff, and customers. Are any of these parties worried about jobs moving offshore. Will this lead to motivational issues, client retention issues or staff retention issues.
2. Data security and privacy. The laws are changing. Disclosure for data loss is here. The directors must have appropriate knowledge of where work is stored/performed to conform with GN 30. Side discussion breakout: We’ve had several conversions done with several software houses, both for bookkeeping conversions and tax software conversions: did we really know where these were being performed? (We should have)
3. Service quality and dependability – What is the OSP staffing quality, the turnover, the political and domestic stability.
4. Loss of internal capabilities – our graduates will lose their training ground. Where will the middle managers come from?
5. Operational efficiencies – are our systems robust and streamlined enough to enable outsourcing to work?
6. Cultural issues with OSP staff, English second language, etc. How do we get around any cultural issues?
7. Are Time differences between domestic and OSP an issue?
8. Technology – do we have reliable internet in-house and with OSP, and any other technology issues?
9. Incompatibility of software systems. What systems are we using. What systems are they using. Is there an issue with compatibility?
10. IP and protection of proprietary info – who owns the work-papers, spreadsheets and other data. Where does the data reside? Who does the backups?
11. What are the Legal and contractual issues?
12. Who pockets the risk dividend as a result of outsourcing. Should it be the employees, the clients or the owners?
The last issue is probably the least thought about, but potentially the most interesting. If the owners of the business (the Directors) make an initiative to take on outsourcing, and then take all the risk, then (as we’ve historically seen) they pocket all the profits. Perhaps somewhere down the track the reduced compliance costs and acceptance of outsourcing will reduce the “risk premium”, and force the owners to share the savings with customers. Somewhere in this question is a reward for employees taking on board outsourcing into the firm, at least at an early stage until it becomes commonplace.
Worried about outsourcing. Drop Odyssey a line and we’ll help you get over those Outsourcing fears!