What is Foreign Account Outsourcing in India?

Foreign Accounting Function Outsourcing is the assigning of accounting, book-keeping and/or compliance work to accounting professionals in another country. Outsourcing helps businesses save time and resources while benefiting from high-quality expert manpower. 

India is a leading country in the outsourcing industry, especially in the accounting and finance sector. India has an abundance of world-class accounting firms, BPO/KPO Companies and experienced manpower. 

To do this, a business owner needs to partner with an outsourced accounting services provider, who will present him or her with qualified candidates. Let’s say this business owner is you. You’ll then have the opportunity to screen, interview and hire the offshore candidates who will form your new global team.

In essence, the service provides you with an accounting department experience. You delegate the day-to-day work you may have been spending hours completing to your global team members. With the time you get back, you can focus on your core business or yourself.

Foreign companies can outsource their Accounting and Finance work to Indian Chartered Accountant (CA) firms to benefit from their cost-effective and quality services.  

What it covers

This depends on individual business needs, budget, etc.

However, there are certain common accounting services that are popular in India, including:

• Accounts Receivable or Accounts Payable Services.
• Book-keeping Services.
• Drafting a Financial Statement.
• Generating Bank Statements.
• Controller Services.
• Company Formation Registration.
• Financial Planning and Analysis.
• Cost or Financial Accounting.
• Fraud or Forensic Accounting.
• Tax Reporting and Filing.
• Payroll Processing.
• General Ledger Maintenance.

Benefits of Foreign Accounting Functions Outsourcing in India

1. Trustworthy Professionals

There are several benefits when foreign companies outsource their work in India. In India this work can be done by Professional Accountants who are registered with a regulatory body in India (i.e. The Institute of Chartered Accountant of India) who can be trusted by Foreign Clients. The ICAI is one of the largest professional accounting bodies in the world. So, foreign clients can easily trust the registered members (CA) of ICAI.

2. Access to Finance and Accounting Expertise

Outsourcing of accounting work helps you get the services of highly trained and experienced professionals. Professionals who know the ins and outs of not only accounting, accounting standards and principals but also taxation and how these taxes affect the book-keeping. Outsourcing gives a business owner an opportunity to hire these experts part time and have a comprehensive solution.

3. Availability of periodical reports on profitability, receivables, payables and many more

Time to Time availability of periodical reports based on requirement. It helps in reviewing business positions from time to time. This allows the users to form an opinion regarding the company’s financial position for the period and the profits it earned. The users calculate financial ratios based on these financial statements and use these results to make decisions regarding extending credit or investing funds. Managers use these financial statements to evaluate their performance for the period and consider potential actions to improve the results.

4.  Payroll Processing

Payroll is a time-consuming process. By relieving the payroll department of these burdens, these employees can focus on other key areas of the business, such as developing financial strategies that strengthen the company’s competitive advantage. By hiring professionals whose sole responsibility and focus is payroll, you minimize the chances of errors, missed deadlines, omissions, or late payroll tax filings. Payroll providers can dedicate time to resolve any queries or issues your employees may have, speeding up response times.

5. Cost Savings

Outsourcing the finance department to India ensures that companies can save a good amount of money on their accounting costs. It reduces the expenditure on accounting personnel, who do not have to work on site, and also on the office taken on rent by the client.

6. Dedicated Relationship Manager

Trust, understanding, and open communication are just some of the few foundations that can build a long-lasting work relationship between a client and an outsourcing company. To create those elements, it begins from key persons from both companies, i.e. the management personnel.

7. Avoid Turnover and Time-off issues

Outsourcing your accounting and finance processes will also allow you to avoid manpower turnover problems and staff time off. When you are a smaller organization, each team member is vital to the success of the company. When a team member is sick or on vacation, or in the worst-case scenario, they leave, it causes stress and anxiety for remaining employees. When you outsource your accounting and finance to an external company that becomes the company’s problem. That’s not your problem. If the person assigned as contact is out, their team will help you instead, if necessary.

8. Flexibility to meet business needs

Any business owner will jump at the chance to have more flexibility. When you outsource your accounting needs, you can do just that. You can choose the level of service you need and scale up or down as your business grows or changes. This flexibility is not possible with an in-house accounting department.

9. Work profile can be customized based on Client’s need

Any business owner may customize its work profile with an outsourcing agency from time to time as per requirement of the businessman.

10. Clients Data Security

There are a number of computer network security best practices that outsourcing agencies implement to secure their data and build more impenetrable protection against hackers and viruses. There is also so much software available in the market that is used by outsourcing agencies to secure client’s data. Many of these software providers like Quickbooks take a security certificate from the recognized agency. Many method uses by outsourcing agency to secure client’s data like:

• Physical Network Security

Physical security controls are designed to prevent unauthorized personnel from gaining physical access to network components such as routers, cabling cupboards and so on. Controlled access, such as locks, biometric authentication, access card and other devices, is essential in any organization.

• Technical Network Security

Technical security controls protect data that is stored on the network or which is in transit across, into or out of the network. Protection is twofold; it needs to protect data and systems from unauthorized personnel, and it also needs to protect against malicious activities from employees.

• Administrative Network Security

Administrative security controls consist of security policies and processes that control user behavior, including how users are authenticated, their level of access and also how IT staff members implement changes to the infrastructure.

Type of Network Security

• Network Access Control

To ensure that potential attackers cannot infiltrate your network, comprehensive access control policies need to be in place for both users and devices. Network access control (NAC) can be set at the most granular level. For example, you could grant administrators full access to the network but deny access to specific confidential folders or prevent their personal devices from joining the network.

• Antivirus and Antimalware Software

Antivirus and antimalware software protect an organization from a range of malicious software, including viruses, ransomware, worms and Trojans. The best software not only scans files upon entry to the network but continuously scans and tracks files.

• Firewall Protection

Firewalls, as their name suggests, act as a barrier between the untrusted external networks and your trusted internal network. Administrators typically configure a set of defined rules that blocks or permits traffic onto the network. For example, Force point’s Next Generation Firewall (NGFW) offers seamless and centrally managed control of network traffic, whether it is physical, virtual or in the cloud.

• Virtual Private Networks

Virtual private networks (VPNs) create a connection to the network from another endpoint or site. For example, users working from home would typically connect to the organization’s network over a VPN. Data between the two points is encrypted and the user would need to authenticate to allow communication between their device and the network. Force point’s Secure Enterprise SD-WAN allows organizations to quickly create VPNs using drag-and-drop and to protect all locations with our Next Generation Firewall solution.

Some famous software that Indian Accounting Firms uses for doing foreign client accounting are:

• Quick books
• Fresh Books
• Zoho books
• Acumatica Cloud ERP
• Tipalti
• Ledger Lite
• Ledger plus
• Netsuite
• Veryfi
• Xero
• Sag Intact
• Till point
• Wave  Accounting
• Free Agent
• Saasu
• Debitoor
• MYOB Essential

Key Takeaways

A key feature of this content is to explain benefits for any Foreign Country Clients for outsourcing their accounting and related work in India. Outsourcing companies also provide full security and data safety to foreign companies. Also there are more benefits like cost saving, time saving, payroll processing, and other benefits also. Time to Time availability of financial reports helps Company’s owners / management evaluate their performance for the period and consider potential actions to improve the results.

About the Author: This article is contributed by CA Rajeev Gupta, Partner – SIGMAC & Co, Chartered Accountants, Location- Delhi NCR and Gurgaon.

In case of any query please feel free to contact us at: rajeev@sigmac.co.in

For more information and updates, you can contact CA Rajeev Gupta or visit our website https://www.sigmac.co.in/my-blog/.  

Disclaimer: This content has been prepared for general guidance of the reader on the matters of interest only. It should not be treated as professional advice. You should not act upon the information contained in this article without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information or provisions of the law contained in this article. Author and/ or SIGMAC & Co., Chartered Accountants, its members, employees and agents accept no liability, and disclaim all responsibility for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this article or for any decision based on it.