How offshoring can alleviate the CPA middle manager crisis
Almost every firm partner I speak with tells me how hard it is to find middle managers, let alone retain them. In fact, the Tri-Merit/Brainstorm Group annual
Processing Content
There are a variety of reasons for this. First, there’s been a gradual decline in the number of accounting graduates in the past decade. When you factor in excruciating workloads and insufficient salary increases to retain talent, too many promising young people are leaving the profession before they get to the middle manager level.
Also, many firms thought that AI would take care of the middle manager shortfall, but AI hasn’t yet delivered on its potential. So, firms underinvested in people and now they’re caught short. Furthermore, even when AI works, it’s expensive. The middle manager workload is still very manual at this stage and there just aren’t enough people to do it all.
Many middle managers think to themselves: “I have an OK AI preparer. I have preparers in India. But I just don’t have enough help or training to do all this work. What am I supposed to do?” Meanwhile, with so many partners heading for the exits, middle managers don’t have enough guidance or mentoring from above. Without support from above and without enough pay to retain them, they move on to industry, consulting, private equity or other greener pastures.
Offshoring frees up U.S. middle managers
Much of the repetitive work that ties up middle managers — data entry, bookkeeping, trial balances, and tax return preparation — is already being done offshore. In many markets such as India, you have talented people who’ve been working for U.S. firms for over half a dozen years, so they’ve entered middle management territory. This can free up U.S. middle managers to focus on review, client management, and leadership.
Rather than struggling to develop middle managers in the U.S., you need to hire middle managers offshore. There is so much talent to choose from. Middle managers in the U.S. are burning out from all the task-based work they’re doing instead of spending time focusing on client relationships and seeing how else their firms can serve the client. Offshore middle managers can do routine tasks and compliance work for $40,000 to $50,000 a year instead of $100,000-plus in the U.S.
Repairing the mid-level promotion pipeline and reducing stress
The more opportunity U.S. middle managers have to get the firm more business, the better their chances of promotion. Offshoring gives onshore middle managers room to breathe. It gives them the opportunity to work on higher-level things that the partners will recognize and value.
As mentioned earlier, offshore talent can take over work middle managers don’t want to do or should not be doing. Second, offshoring can provide these middle managers with data and insights that the U.S. side can use to improve client relationships and get a bigger “share of wallet.” Your firm has a lot of information about your clients buried in their tax returns and financial documents. When it’s not busy season, there are countless ways for your offshore team to mine client data for new ways to serve them beyond compliance work with the assistance of AI. Private equity-backed firms are already doing this. If you ever want to sell your firm, having this system in place will get you a higher multiple. See my
Leveraging time zone differences
You must put in some effort to figure out how to work across time zones. For starters, make sure there’s a daily or a weekly stand-up meeting with your offshore staff. When you end your day, make sure you give your offshore team instructions. And when the offshore team ends its day, make sure they send you a daily update. Once you adopt best practices like these, time zones become your friend.
Note: Time zones become less of an issue when working with offshore middle managers than with junior preparers because the middle managers have five to 10 years of experience working across time zones.
Helping middle managers work smoothly with offshore teams
When it comes to communication, I’ve found it’s better to overcommunicate than to under-communicate. Have regular structure calls with your offshore team at least weekly. Make sure your middle managers get a status update from their offshore team at least weekly and that every task they assign comes with a specific deadline. If there’s no deadline there’s no urgency to get it done. Also, don’t wait until the following week to get a status update. Have your offshore team send you a status update halfway through the week to circumvent potential problems before they snowball.
The timing is important because in many of the cultures where offshore teams reside, they don’t like confrontation. They don’t like to use words such as “issue” or “problem” or “bottleneck.” Finally, they tend to be more relaxed about emails or calendar invites. Make sure the offshore team knows they’re expected to respond right away to an email, meeting invite or other communication from their U.S. colleagues.
As I’ve mentioned in earlier articles, it takes at least two years for offshoring to ramp up fully. But if you take the time to lay the foundation properly, the benefits can be substantial. As a partner at one of the West Coast firms I work with told me: “If we didn’t have the offshore team, I don’t think my kids would know that they had a father.” Before offshoring, he said he was hesitant to go out and find more work because he didn’t have the team to support it. But now he told me: “I can take on that work because I can scale my India team whenever I want with two or three months’ notice.” Now the firm has gone from a capacity mindset to a true growth mindset.
Don’t think of offshoring as a cheap way to get the work done. Think of it as a smart way to grow your firm, with cost savings as a bonus.
