In recent years, the practice of outsourcing accounting roles to countries like Argentina has gained substantial momentum among accounting and finance firms in the United States. With technological advancements, improved communication tools, and a globalized workforce, firms are now more than ever exploring the benefits of hiring full-time accountants remotely from Argentina.
Outsourcing is a strategic decision that many accounting and finance firms are considering in order to reduce costs, improve efficiency, and access a larger pool of talent. However, outsourcing is not a one-size-fits-all solution, and it requires careful planning and evaluation of the potential benefits and risks. One of the key factors to consider when outsourcing is the location of the service provider. Different countries have different advantages and disadvantages in terms of quality, cost, culture, and legal environment.
Why Are US Accounting Firms Outsourcing to Argentina?
Argentina is a South American country with a population of about 45 million people and a GDP of $450 billion1. Argentina has a rich history, culture, and natural beauty, as well as a strong educational system, a diverse economy, and a vibrant entrepreneurial scene.
Argentina is also known for its high level of proficiency in English, which is widely spoken as a second language by professionals and students.
So, there are many reasons why US accounting firms are outsourcing to Argentina, but here are some of the main ones:
40% of Potential Cost Savings
According to a report by Deloitte, Argentina offers an average cost saving of 40% compared to the US for outsourcing services. This is mainly due to the lower wages, taxes, and living expenses in Argentina. For example, the average annual salary for an accountant in Argentina is about $15,0003, while in the US it is about $55,0004.
Outsourcing to Argentina can also help US firms save on infrastructure, training, and recruitment costs.
Quality and expertise
Argentina has a well-developed and competitive accounting sector, with more than 150,000 registered accountants5 and over 300 accounting firms6. Argentina also has a high-quality education system, with more than 100 universities offering accounting degrees. Many Argentine accountants have international certifications, such as CPA or ACCA, and are familiar with US GAAP and IFRS standards. Argentine accountants are also known for their analytical skills, creativity, and problem-solving abilities.
Time zone and cultural compatibility
Argentina is in the same or similar time zone as most parts of the US, which facilitates communication and collaboration between teams. Argentina also shares many cultural values and business practices with the US, such as professionalism, innovation, customer orientation, and work ethic. Argentine accountants are fluent in English and have a good understanding of the US market and regulations.
Innovation and flexibility
Argentina is a hub for innovation and entrepreneurship in Latin America, with a thriving startup ecosystem and a strong presence of global tech companies. Argentina also ranks high in terms of digital readiness and internet penetration. These factors enable Argentine accountants to leverage technology and automation to deliver more efficient and value-added services to their clients. Argentine accountants are also adaptable and responsive to changing customer needs and expectations.
Pros of Outsourcing Accounting Roles to Argentina
Now that we've explored the motivations behind outsourcing accounting roles to Argentina, let's dive into the numerous advantages that come with this strategic decision:
Increased productivity and efficiency: Outsourcing can help US firms optimize their workflows and processes by delegating routine or non-core tasks to their Argentine partners. This can free up time and resources for US firms to focus on more strategic or complex activities that require their expertise and experience. Outsourcing can also improve the quality and accuracy of accounting data and reports by reducing errors and discrepancies.
Reduced risks and liabilities
Outsourcing can help US firms mitigate some of the risks and liabilities associated with accounting functions, such as fraud, compliance issues, tax audits, or litigation. By outsourcing to a reputable and reliable service provider in Argentina, US firms can ensure that their accounting records are maintained according to the highest standards of ethics and professionalism. Outsourcing can also provide US firms with access to local knowledge and expertise on tax laws, regulations, and best practices in Argentina.
Enhanced customer satisfaction and retention
Outsourcing can help US firms enhance their customer satisfaction and retention by providing them with more timely, accurate, and comprehensive accounting information and services. Outsourcing can also enable US firms to offer more customized and flexible solutions to their clients based on their specific needs and preferences. Outsourcing can also increase customer loyalty by demonstrating US firms’ commitment to quality, innovation, and value creation.
Challenges of Outsourcing Accounting Roles to Argentina
Loss of control or visibility
Outsourcing can entail a loss of control or visibility over some aspects of the accounting functions that are performed by the Argentine partner. This can create some difficulties or risks for US firms in terms of monitoring performance, ensuring compliance, managing expectations or resolving disputes.
To overcome this challenge, US firms need to establish clear communication channels, reporting mechanisms, and feedback systems with their Argentine partner. US firms also need to define and agree on the scope, terms, and conditions of the outsourcing contract, as well as the roles and responsibilities of each party.
Partnering with a local end-to-end management agency that can take care of many of these issues can help ease the relationship with the remote employee.
Political or economic instability
Argentina has a history of political or economic instability that can affect the business environment and the outsourcing relationship. For example, Argentina has experienced several episodes of currency devaluation, inflation, debt default, social unrest, or government intervention in recent years. These factors can create uncertainty, volatility, or risk for US firms that outsource to Argentina.
To overcome this challenge, US firms need to monitor the political or economic situation in Argentina closely and have contingency plans in place to deal with any potential disruptions or changes. The upside of this is Argentine employees tend to really value international opportunities and US employment tends to result in a better income than local expected salaries raising employees' morale and satisfaction.
Initial Setup Costs
Setting up an outsourcing arrangement with an Argentine accounting team may incur initial costs related to infrastructure, technology, and training. Firms should budget for these expenses when considering outsourcing especially if your intention is to create an entity in the country.
A great way to reduce this cost is to acces either an end-to-end management provider or partner with a staffing agency o Employer of Record that already takes care of these.
Best Accounting Roles To Outsource to Argentina
Outsourcing accounting roles to Argentina can be a viable and beneficial option for US accounting firms, but not all roles are equally suitable or feasible for outsourcing. Some of the best accounting roles to outsource to Argentina are:
Bookkeeping: Bookkeeping is one of the most common and basic accounting functions that can be easily outsourced to Argentina. Bookkeeping involves recording and classifying financial transactions, such as sales, purchases, receipts, and payments. Bookkeeping can be time-consuming and tedious for US firms, but it can be done efficiently and accurately by Argentine accountants using software and automation tools. Outsourcing bookkeeping can help US firms save costs, improve data quality, and focus on more value-added activities.
Tax preparation: Tax preparation is another accounting function that can be outsourced to Argentina. Tax preparation involves preparing and filing tax returns for individuals or businesses based on their income and expenses. Tax preparation can be complex and challenging for US firms, especially if they have clients with international operations or transactions. Outsourcing tax preparation can help US firms access local tax expertise, reduce compliance risks, and increase customer satisfaction.
Financial reporting: Financial reporting is an accounting function that involves preparing and presenting financial statements and other reports for internal or external users. Financial reporting can be outsourced to Argentina if the reports are based on US GAAP or IFRS standards, which are widely used and understood by Argentine accountants. Outsourcing financial reporting can help US firms improve reporting quality, timeliness, and consistency.
Payroll: Payroll is an accounting function that involves calculating and paying salaries, wages, bonuses, commissions, and other benefits to employees. Payroll can be outsourced to Argentina if the employees are based in Argentina or other countries where Argentine accountants have knowledge and experience. Outsourcing payroll can help US firms reduce payroll errors, comply with local labor laws, and improve employee satisfaction.
Audit: Audit is an accounting function that involves examining and verifying the accuracy and completeness of financial records and reports. Audit can be outsourced to Argentina if the audit is performed by an independent and qualified auditor who follows the US or international auditing standards. Outsourcing audit can help US firms enhance their credibility, reliability, and transparency with their stakeholders.
Advisory: Advisory is an accounting function that involves providing consulting and advisory services to clients on various accounting, financial, or business issues. The advisory can be outsourced to Argentina if the advisory services are related to areas where Argentine accountants have expertise and insight, such as tax planning, financial analysis, business valuation, or mergers and acquisitions. Outsourcing advisory can help US firms add value, solve problems, and create opportunities for their clients.
Conclusion
Outsourcing accounting roles to Argentina can be a smart and strategic move for US accounting firms that want to reduce costs, improve quality, and access talent. Argentina offers many advantages for outsourcing accounting roles, such as cost savings, quality and expertise, time zone and cultural compatibility, and innovation and flexibility. However, outsourcing accounting roles to Argentina also comes with some challenges and drawbacks, such as loss of control or visibility, cultural or language barriers, and political or economic instability. Therefore, US accounting firms need to carefully evaluate the pros and cons of outsourcing accounting roles to Argentina and choose the best roles to outsource based on their specific needs and goals.
