Outsourcing has always been a controversial issue for both clients and the SMSF industry, but a bit of transparency may go a long way to resolving some of the negativity around it.
Last time SMSF adviser asked my opinion on outsourcing back in 2015 I was not a fan however the past few years and a recent trip to the Philippines to visit a few outsourcing providers has changed my view.
Almost 50 per cent of the SMSFs we audit are now being processed offshore and the quality is better than the funds we see from small practitioners and on par with firms who have a dedicated superannuation team in Australia.
So what has changed? Initially the funds we were getting were from Vietnam and India – now more firms we audit are outsourcing to the Philippines.
Why does the country make a difference? In Asia only Singapore performs higher in the English proficiency index. They have high quality universities with four featuring in the world’s best rankings for 2016/17. Plus they have an enormous population to draw from so competition for jobs is high.
The firms I visited over there for superannuation training were knowledgeable of the latest superannuation changes in Australia and the questions I was asked were similar to those I receive when presenting webinars in Australia. Some of the accountants I spoke to have been working on Australian tax for 10 years.
Outsourcing is growing at an incredible pace – The Outsourced Accountant has grown from 0 to 550 accountants in 3.5 years. More and more clients are small firms. The reality is whatever your view on outsourcing it isn’t going away.
A recent study released by Superfund Wholesale stated that 97 per cent of respondents believe offshoring is not secure and 70 per cent feeling uncomfortable with their personal financial records being processed and stored overseas.
When I was in the Philippines I saw the staff go through security, phones are in their lockers and the USB devices are disabled on their computers – meaning that the data is actually more secure then it is in my office in Australia where a rouge staff member could save confidential documents to a USB.
So what is the solution?
To me the study results show that firms need to talk to their clients about outsourcing instead of burying it in an engagement letter like it is a dirty secret. Explain that the team overseas is part of your firm, they are your employees and are trained by you just like any other staff member. Let them know the systems you have in place to protect their data.
And if you are a sceptic like I was go and visit the Philippines.
By Deanne Firth, director, Tactical Super
SUBSCRIBE TO THE SMSF ADVISER BULLETIN
- 21 Aug 2016Risks flagged with real estate appraisal valuesBy Miranda Brownlee
- 21 Aug 2016Lawyer challenges ATO view on two fund strategiesBy Miranda Brownlee
- 18 Aug 2017ATO locks in details, addresses panic on real-time reportingBy Katarina Taurian
- 18 Aug 2017Data feeds unreliable for new reporting, says mid-tierBy Miranda Brownlee
- 18 Aug 2017Tax component confusion spurs potential tax liabilitiesBy Miranda Brownlee
- 18 Aug 2017Contributions triple in June quarter, survey showsBy Staff Reporter
- view all
- ATO locks in details, addresses panic on real-time reporting
The tax office has addressed several points of confusion with the new events-based reporting regime, locked in key deadlines, and outlined w...read more
- Data feeds unreliable for new reporting, says mid-tier
With an estimated 20 per cent of SMSFs still encountering errors from data feeds, one mid-tier firm believes the ATO should allow SMSF pract...read more
- view all