The history of Australian accounting outsourcing, and why finding quality providers is hard

David CarterOutsourcing

A quick history of Australian compliance outsourcing

Our CEO David Carter has led the Odyssey in outsourcing to over 1,000 Australian accounting firms over the past 15 years, and Odyssey has completed in excess of 250,000 Australian returns. So we feel we have enough depth and breadth to talk a bit about the history of Australian accounting outsourcing.

Going back to the year dot, when Australian accounting burst (somewhat quietly) onto the Australian market, there were a lot of misconceptions about what it actually was. Back in the good old days of over 15 years ago, which is pre digital, pre cloud, pre Xero and QBO, things were all desktop/server based. Some of the software products were designed to prevent backup/restore of individual tax returns, and these clunky database software offerings fell to the wayside pretty quickly.

But back at the year dot, the market was presented with limited information on the outsourcing offerings, a lack of experienced outsource providers, a lack of outsource processes, lack of systems, trainings.. Just about everything.. and a distinct lack of consistent quality from outsourced providers. I’m pretty sure all outsourcing providers were in that boat.

As the market developed (around 10 years ago), there were some epic fails amongst some of the larger providers, while the providers that are around today got down and started investing in decent portals, websites, training processes and systems, and practice management systems. Looking at what was available, there was a dearth of software to support Outsourcing providers, and pre cloud there just wasn’t anything available off the shelf.

Moving into the last handful of years, there has been a real maturity of outsourcing providers. There has continued to be a massive demand that can’t be met by current resource supply in the quality providers, and we continue to see new entrants arrive from three new places:

1. Offshore firms that are actually offshore labour suppliers, though market themselves as Outsourcing providers. It’s clear that if you are hiring and training people offshore, then this isn’t outsourcing

2. Splits from current providers. With Outsourcing to Australia now almost 20 years old, there are grandchild companies in the market i.e. the initial provider lost staff who left to setup their new companies, who then lost staff to setup their new companies.

3. New entrants in the market. Usually have deep pockets filled with cash, and ready to throw it around. Normally do a pretty bad job of outsourcing.

With the above maturity of the market, we can see that there continues to be a maturity in the Australian compliance outsourcing offerings, but this is obfuscated by the new entrants into the market. For those that complete a due diligence, and are willing to pay market rates, then outsourcing can work effectively. As the old adage goes: If it (the price/offering) looks too good to be true, then it usually is!