How has the market for outsourced accounting services changed?

— In your experience, what is the reason behind the growing demand for outsourced accounting functions we’ve seen over the past year?

— One of the constraints we had observed before the pandemic was the customer’s fear of losing control of processes once they become outsourced. The coronavirus crisis and the massive shift to remote work have shown that smartly organized business processes can remain effective, even if the employees-in-charge are outside the office.

Confidence in outsourcing has also grown with companies less and less willing to retain non-core functions, while increasing their staff and being exposed to risks. Organizations seek to focus on key business processes, and this is where accounting outsourcing services come in.

Besides, many companies are currently cutting their rented office spaces, transferring employees to remote and mixed type work. Hence, there is a growing demand for electronic document management services for smooth internal communications, as well as for digital solutions offered by providers which ensure uninterrupted business processes and reduction of costs for the functions.

— What kind of activities were the most sought-after, what are they about, and how does the customer benefit from such projects?

— The past year was not an easy one, and companies had to respond quickly to new reality. We provided methodological support helping companies manage work in accordance with the sanitary and epidemiological requirements, consulting on the documents the employer needs in a given situation, supplier relations, and so on.

Of course, remote work has pushed many of our clients to switch to electronic document flow (EDF) with suppliers and buyers, and we helped them organize this process. The demand for Employee Self Service solutions has also increased among clients as part of outsourced HR functions. These include: HR bots, portals, etc. Such products reduce the labour costs of personnel and accounting services for processing employee requests, sending out payroll sheets, and so on. At the same time, communications through digital tools ensure a high level of information security, in contrast to standard communication channels.

— In your experience, what challenges have foreign businesses operating in Russia experienced during the pandemic, and how has the demand for outsourced accounting functions changed in this regard? Have you seen a decline in the number of requests for services from foreign businesses, and, vice versa, has the number of requests for services from Russian businesses increased?

— We continued to receive requests from foreign companies and, in general, in 2020 we gained a number of new clients. We receive requests from Russian companies as well, but we see that they don’t understand the value of outsourcing as much as their foreign peers do. Not everyone is ready to change their processes and adopt a provider’s service model. In general, we feel that there is interest in outsourcing among the management of Russian companies, but they need time to start using this service more actively.

— What factors do you think are slowing down the development of the market for outsourced accounting services today?

— Tightening legislation, sanctions and new business requirements distract foreign companies from the Russian market. In 2020 alone, the number of Russian companies set up by foreign investors fell by more than a third, which undoubtedly reduces the number of potential customers. At the same time, the pandemic has also affected the timing of decisions. Many projects were frozen in 2020, and top managers expected to return to them only after the stabilization of the situation in Russia and globally.

— What, in your opinion, are the short-term prospects for the development of this professional service sector, for example, until the end of 2021?

— Despite the negative consequences, the pandemic has largely driven the development of the outsourcing market. Organizations that were not ready to cooperate with the provider are now convinced that by transferring a function to an outsourcer, they receive not just a subject matter expert, but proven developments, relevant IT solutions, and a knowledge base.

In addition, we can see that in a crisis companies do not want to invest in the development and implementation of expensive IT tools, therefore, preference is given to providers who are able to offer ready-made digital products to solve their business tasks.

Market development is also driven by the tightening of control        on the part of the inspection authorities. Companies are trying to minimize their risks and in order to meet their requirements they are looking for high-level specialists who are available from service providers.

— Can we state that digital transformation has affected accounting outsourcing activities, and how does this manifest itself?

— The effect of digital transformation on accounting outsourcing activities is obvious. Digitalization and robotization make it possible to automate a number of processes, which means a lower cost of the function for the client and minimization of the risks of the human factor.

The use of digital tools allows us to reduce the number of manual operations and reallocate resources to higher-level tasks. It is important for clients to see the provider not just as a contractor, but also a professional consultant who can be involved in solving strategic issues. It is obvious that companies that are not ready to offer their customers advanced IT solutions need time to build up their expertise.

Source: RAEX