In April, accountants scramble to prepare client tax returns for the end-of-the-month deadline. It means long hours and searching for extra bodies to cope with the crunch. Horwath Orenstein, a 100-person chartered accounting firm in Toronto, has found a better way --outsourcing the work to India.
"We discovered it seven to eight years ago from networking in the United States," says partner Gary Marcus. "We found the U.S. was getting into it very deep, primarily from the processing of U.S. tax returns."
Horwath Orenstein partners visited India and were introduced to Datamatics Technologies Ltd., a 16-year-old, publicly traded outsourcer, which employs 700 in its accounting business, including 140 certified public accounts (CPAs) and certified accountants (CAs).
Datamatics was "interested in getting into the Canadian market, so we said, 'OK, let's try it out,' " Mr. Marcus says. "They had no idea what Canadian taxes were, so we sent them a dozen tax returns from the previous year for them to do from scratch." A few weeks later, the returns were sent back with only a few errors.
"They learned how to do it," Mr. Marcus says. Datamatics now processes more than 1,000 returns annually for the firm. The accountants vet them for accuracy and focus on "more complex issues," Mr. Marcus says. "What they are replacing is the lower level of work."
Welcome to the growing world of finance and accounting outsourcing. What started out with billing, invoicing, general bookkeeping, accounts payable and receivables is now including tax preparation, even audit services.
According to NASSCOM, an Indian trade body representing the outsourcing business, high-end accounting work now accounts for 30% to 40% of the market.
According to the Institute of Chartered Accountants of India, there are about 140,000 practising CAs in the country, and another 350,000 are pursuing their CA designation. That talent pool is attractive to North American firms. "There's such a demand for accounting people. You can't get them," Mr. Marcus says.
Navin Dave knows all about the accounting opportunity in India. The Canadian CA was given the task of setting up an Indian office for his firm, KPMG. That operation grew to 3,500 people. Now back in Toronto, it's his job to figure out how to leverage the firm's global resources.
KPMG is using its Bangalore office as a "captive" centre, where it sends offshore work, including thousands of U.S. tax returns, which are completed with 99.5% accuracy. "You cannot offshore 100% of every process," Mr. Dave warns, noting the firm plans to keep up to 25% of its processes in North America, so that it can continue to train people locally.
jmiddlemiss@nationalpost.com
