Hiring and managing employees in foreign countries can be challenging, especially when it comes to complying with local labor laws, tax regulations, and payroll requirements. That's why many firms opt for using an employer of record (EOR) service to simplify the process and mitigate the risks.
There are many benefits to this hiring option, but how do you choose the best EOR service for your offshore accounting talent? There are many factors to consider, such as the quality of talent, the cost of service, the level of support, and the reputation of the provider. However, one of the most important criteria is the location of your offshore team.
Different countries have different advantages and disadvantages when it comes to offshoring accounting staff. In this article, we will compare three popular offshoring destinations for accounting firms: the Philippines, India, and South America. Let's see some pros and cons and the main differences between them.
The Philippines: A Low-Cost Option
The Philippines is one of the most popular offshoring destinations for accounting firms, especially from North America and Australia. The main reasons are its low labor costs, high English proficiency, and cultural affinity with Western countries. According to a report by EF Education First, the Philippines ranks 22nd out of 111 countries in English skills, making it the highest-ranking Asian country. The Philippines also has a large pool of accounting talent, with over 8,000 CPAs in Manila alone.
However, the Philippines also has some drawbacks that may affect the quality and efficiency of your offshore team. One of them is the time zone difference. The Philippines is 12 or 13 hours ahead of North America and 2 or 3 hours ahead of Australia, depending on daylight saving time. This means that there is little or no overlap in working hours between your onshore and offshore teams, which can make communication and collaboration more difficult. Another challenge is the infrastructure and internet connectivity in the Philippines. The country ranks 100th out of 176 countries in internet speed, which can affect the productivity and reliability of your offshore team. Furthermore, the Philippines is prone to natural disasters such as typhoons, earthquakes, and volcanic eruptions, which can disrupt your business operations.
India: A Large Talent Pool with Technical Skills
India is another popular offshoring destination for accounting firms, especially from Europe and Asia. The main reasons are its large talent pool, advanced technical skills, and low labor costs. India has over 300,000 accountants, many of whom work for the Big Four accounting firms or multinational corporations. India also has a strong IT sector that produces skilled professionals with data analysis and programming skills. Additionally, India offers competitive labor costs that are lower than most other countries.
However, India has a different work culture than Western countries, which may cause misunderstandings or conflicts in communication and expectations. For instance, Indian workers may be more hierarchical and deferential than Western workers, which may affect their initiative and feedback.
Another challenge is the tax system in India. India has a complex tax system that varies by state and industry, which can make it difficult for firms to comply with local tax regulations and reporting requirements. Moreover, India has a high tax rate for foreign companies at 30%, which can reduce your cost savings.
South America: Similar Time Zone and High Talent Quality
South America has a similar time zone as North America (except Alaska), which means that there is more overlap in working hours between your onshore and offshore teams. This makes communication and collaboration easier and more efficient. You can also schedule meetings or calls at convenient times without disrupting your team's work-life balance.
South America also has a high talent quality when it comes to accounting staff with several reputable universities that offer accounting degrees, such as the University of Sao Paulo in Brazil, the University of Buenos Aires in Argentina, and the University of Chile in Chile. These universities produce graduates with strong accounting skills and knowledge, as well as exposure to international accounting standards and practices. Moreover, South America has a growing pool of bilingual or multilingual professionals who can speak English, Spanish, Portuguese, and other languages. According to a report by EF Education First, South America ranks 18th out of 24 regions in English skills, which is higher than Asia (20th) and Africa (23rd), with a distinct place for Argentina that ranks first in the region.
South America also offers competitive labor costs that are lower than North America and Europe, but higher than Asia. This means that you can save money while still paying your offshore team a fair and attractive salary. They have a stable and modern infrastructure and internet connectivity that supports your business operations.
How to Choose the Best EOR Service
If you decide to offshore your accounting staff in South America, you will need to choose the best EOR service for your needs. An EOR service can help you hire and manage your offshore team in South America without having to set up a legal entity or deal with local labor laws, tax regulations, payroll requirements, and compliance issues. An EOR service can also provide you with local support, guidance, and expertise to ensure a smooth and successful offshoring experience.
However, not all EOR services are created equal. You will need to compare different EOR providers based on several criteria, such as:
- The scope of services: Some EOR providers may offer more comprehensive services than others, such as recruitment, onboarding, training, performance management, benefits administration, legal advice, and payroll processing. You will need to choose an EOR provider that can meet your specific needs and expectations.
- The cost of services: EOR providers usually charge a fixed fee based on a percentage of the employee’s payments, but these fees charge depending on the level of service, the number of employees, the country of operation, and the contract duration. You will need to choose an EOR provider that can offer you a transparent and competitive pricing structure that fits your budget.
- The quality of service: Experience and reputation is key. You will need to choose an EOR provider that has a proven track record of delivering high-quality service, customer satisfaction, and compliance standards.
- The customer support: You will need to choose an EOR provider that can provide you with 24/7 support via phone, email, chat, or video call. You will also need to choose an EOR provider that can assign you a dedicated account manager who can understand your business goals and challenges and provide you with personalized solutions.
Vintti: A great alternative for offshoring accounting
If you are looking for a reliable and cost-effective offshore accounting service provider, you may want to consider Vintti. Vintti is a headhunter agency that specializes in providing world-class financial and accounting talent from South America, fully aligned with your time zone. Vintti can help you find and hire qualified and experienced accountants who have excellent proficiency in US GAAP, cultural fit, and communication skills. Vintti can also handle all the formalities of hiring and managing the offshore team, saving you time and hassle.
By working with Vintti, you can enjoy the benefits of offshoring accounting without compromising on quality and security. To learn more about Vintti and how they can help you with your accounting needs, book a call with us.
Last thoughts
Offshoring accounting staff can be a smart strategy for accounting firms that want to reduce costs, access a larger talent pool, and improve efficiency. However, hiring and managing employees in foreign countries can be challenging without the help of an EOR service. An EOR service can simplify the process and mitigate the risks by acting as the legal employer of your offshore workers.
To choose the best EOR service for your offshore accounting team in South America you should compare different EOR providers based on their scope of services cost of services quality of service and customer support.
Reference
Accounting Talent In The Philippines: How To Build A Global Workforce
The world’s largest ranking of countries and regions by English skills
India Vs Philippines Which is the Best Offshoring Destination for Accounting Firm
