Small accounting firms

These are some pictures of small accounting firm in Chennai, India visited two years ago. The firm is providing accounting services to another small public accounting firm in UK. Full set of account preparation being outsourced without client's knowledge. Is this unethical?

The office is small and cramp. Staffs have to work long hours to meet the 24x7 meeting with UK companies.

We are looking for similar case in Malaysia.

Why outsource Accounting is difficult?

http://www.prlog.org/10084411-importance-of-accounting-outsourcing.html

Accounting is a critical department of every business and so it needs special care for its maintenance. Only a qualified and skilled accounts professional with depth knowledge can handle the work very efficiently of accounts business outsource process. The accounting task mainly includes back-office services and is works as a support staff to production and marketing team of any organization. Accounts department performs bookkeeping, general ledger, tax computation and filing, data entry, spreadsheet and statutory form completion and submission work.

SME factory

These are some pictures on SMEs factory visited few months ago. One of them is a small factory doing outsourcing of plastic containers for MAS catering. A small and self-funded local company. Refused to accept any assistant or loan. Very conservative.

Why?

It is hard to find a local company providing accounting outsourcing services. What we found so far are generally a foreign company locating in Malaysia and providing outsourcing services to Malaysian companies.

Why dont they take advantage of Malaysia being the third most attractive location for offshoring and the generous funding by MDV?

iCIMB 2

More info on iCIMB.

• Contract:
• internal outsourcer for CIMB only - arms length relationship
  
• close door to other clients
• ten year contract, review annually with more services being added
• service credit issues - consistenty being charged for jobs not meeting KPI
  
• Outsourcing work
• very little work on accounting outsourcing - mainly branch accounting and auto loan processing. Since March 2008, CIMB has withdrawn its branch accounting and started to do it in-house. Reason? Duplication of work.
• only 13 out of 1,500 staffs work on branch accounting.
• more work on business process outsourcing such as ATM, Speed etc.
• Employees
• contract and permanent

• Risks
• do not forsee any serious risks in relationship
  
• secure with long term contract
  
• Control
  
• passwords/rewards/report
  

Attrition 2

Looking into more details on attrition issues in India.

http://www.thehindubusinessline.com/2008/09/02/stories/2008090251280400.htm

The attrition in the Business Process Outsourcing (BPO) industry is roughly 7.8 percentage points higher than other sectors, a report by global management consulting firm Hay Group said on Monday.

While the staff turnover in India stood at 15.7 per cent, at BPO companies the attrition is the country’s highest at 23.5 per cent, followed by communications (22 per cent) and retail (18 per cent).

The report ‘BPO Special Sector Survey 2008’ notes that remuneration structure design was not as attractive when compared to other industries in India, leading to higher employee churn in BPO companies. Short-term incentives account for only four per cent of total remuneration, compared to 10 per cent generally – benefits are limited to those that can be enjoyed only post-retirement, such as pension fund and gratuity, and not during the employment period.

Low labour cost promised by Indians Co is no longer a benefit to company outsourcing to India. It is offset by high attrition level. People jump from one job to another easily. Most company try to maintain their staffs by offering higher salary. Hence it is just a myth ya?


Malaysia, the third most attractive location for offshoring, has high potential by not only offering competitive labour cost but also offering better infrastructure such as that in Cyberjaya.

Attrition

In response to "The staff turnover of 23.5 per cent in Business process outsourcing is a major concern in these tough times " by Pijush Lodh Sep. 1, 2008

"The BPO industry hires a large number of graduates who are bright and ambitious. From our analysis, the overall compensation structure design is not competitive when compared to general market practices. This means that BPO employees do not receive as much cash-in-hand as their peers in other industries. When you add unattractive remuneration to working shifts, lack of career development, and monotonous tasks, it is not surprising that employees leave when offered a small salary increase," states Oscar De Mello, Country Head of Hay Group's Reward Information Services in India.

- These are complaints from staffs in India. They are working for money and are trapped in monotonous tasks. Low level job satisfaction is not a good sign for the industry. Xansa used 'band' to overcome this issue.

e-procurement

I read several articles on e-procurement few days ago. Trying to understand the process. Interesting. This is the early stage of outsourcing process. Identifying supplier/vendor through tendering process. Being simplified with ICTs. Lots of issues involved.

Angeles and Nath (2007) discuss issues on success factors and challenges in implementing B2B e-procurement taking into consideration infrastructure issues.

Harrigan et al (2008) provide further evidence on the development of e-procurement within the manufacturing industry in Ireland.