When one of Mike Block's largest 1040 clients walked through his door on April 8 expecting to have his personal and corporate returns completed for tax season, the CPA didn't exactly sleep.
He stayed at the office until 2 a.m. scanning in documents, some in the wrong direction, then messaged his crew in India to do what they could to piece them together and to send him PDFs of the tax return.
By 10:30 that morning, the job was complete.
"That's when I realized there was just no substituting the fact that it could be done overnight when I was already dead and could barely scan, [let alone] calculate anything," Block says. "A chartered accountant prepared my most complex tax return 70 percent faster than expected, with 80 percent fewer errors, while I slept. Having [up] to 10 assistants help my clients and I, any day or night, on short notice, is priceless."
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That was six years ago.
Today, Fort Lauderdale, Fla.-based BlockTax employs seven people in house and eight overseas, including in India, Pakistan and China.
Recommended Resources
Sending work to other companies in the states or overseas could be risky, especially if the company is not well-known.
How can firms sort through the hundreds of thousands of outsourcers out there to find the good guys and mitigate the risk factor?
Following are some companies that CPAs and others in the accounting industry recommend:
CPASiteSolutions (www.cpasitesolutions.com). This Winooski, Vt.-based company offers a custom-designed Web site with monthly site updates including new employees and other announcements, client newsletters and tax calendars. It also provides client portals where they can share tax files and other documents with their accountants. An Internet marketing package provides tools to help firms get listed on Google searches and generate referrals. Costs range from $49.50 to $99.50 per month.
LeverPoint (www.leverpointinc.com). LeverPoint leverages an onshore/offshore model, with offices in Reston, Va., as well as in India, Argentina and Belarus in northern Europe. It offers quality assurance work, application security and core product development.
Real Time Data Services (www.myrealdata.com). IT support is available to troubleshoot server and desktop problems around the clock. Virtual servers with unlimited applications cost $99 per user. QuickBooks hosting lets accountants and clients use the application concurrently for $29 per user name per month, and tax software hosting exists for ProSeries, Lacerte, CCH and ATX. Real Time Global Services, the BPO side of the company's operation, charges an hourly rate that varies per project for basic QuickBooks bookkeeping such as entering bills, doing bank reconciliations and payroll. Its sales and marketing personnel are located in Newport Beach and its back office in New Delhi.
Xpitax (www.xpitax.com). All of Xpitax's client information for its outsourced tax preparation work is stored in Boston and employees in India have restricted Internet and email access. Xpitax assigns clients to a team consisting of a supervised chartered accountant and three staff members.
A two-month training program, developed by a U.S.-based CPA firm, begins with classroom instruction on U.S. tax law and various tax software applications. Following that is extensive practical training through preparing sample returns of varying difficulty. Basic individual tax returns cost $50, including any number of states; complex, multistate corporate filings can cost up to $350. Last tax season, the average for any type of return was $93.
The QuickBooks ProAdvisor owns one of a growing number of small firms taking advantage of outsourcing to help lower costs and improve efficiency.
"The dirty little secret is the big auditing firms are doing this on a gigantic level. It's the little guy who has not yet stepped into it," Block says. "Outsourcing lets accountants make friends precisely where our country needs them, while helping to end world hunger and promote world peace."
There's a stigma to outsourcing that relates to paying such low wages that it's "horrible," Block explains, but he reasons that many foreigners are studying U.S. accounting because they prefer to work in that environment, rather than out in the fields.
"I wished someone a happy birthday who had been working for me for two years. She said, 'The best birthday present you could give me is more work.' They're doing this because it's the best job you could get. This kind of thing would make every U.S. foreign aid program absolutely unnecessary," Block says. "In terms of civility, eagerness and overall respect, you can't begin to compare what you get out of the people compared to what you get locally."
Cheaper Labor
That conjures up the image of America's workforce losing jobs to their cheaper counterparts in other countries ($3 to $10 per hour compared to $35 to $75 in Block's case), a topic of heated political debates in recent years. But Block says every dollar he saves through offshoring allows him to hire more help in Florida. Plus, he passes a chunk of his savings on to his clients. They all know what he's doing and he hasn't lost a single client because of it, especially when he's cutting their fees in half and still saving money himself.
