Building Offshore Teams
What you need to know about hiring offshore talent and building a global team
I partnered with an offshore recruiting firm called OnlyExperts (great name :) that is focused exclusively on helping companies hire offshore accounting talent.
There are a lot of offshore recruiting companies…but OnlyExperts is unique because it is exclusively focused on accounting talent so they do that better than anyone else.
OnlyExperts helps companies find accounting talent in places like the Philippines and Latin America. Not only are these folks up to 80% cheaper than U.S. hires, but there is a large pool of very talented folks that are dedicated and hard working.
Keep reading for the pro/cons I have seen building offshore teams and how to think about creating a global team strategy.
Go check out OnlyExperts and mention I sent you for a 20% discount.
Why Hire Offshore?
When I first built out some of my accounting team offshore, I thought the only benefit was cost. While cost is often a primary driver of hiring overseas, it certainly isn’t the only one.
Below are the benefits I have seen hiring offshore teams:
1. Cost Savings & More Resources
The finance team unsurprisingly receives the least amount of budget (especially in the early days). We do it to ourselves to some degree since we control the budget. We want money to go to things that will drive value like innovation (R&D) and selling the product.
The accounting group is just a cost center, right?
To some degree, yes. But an understaffed, burnt out finance team can cause a lot of problems for a company:
Important financial data is late and/or wrong
Delayed or failed financial statement audits
Failing to invoice customers and/or properly collect (real lost money!)
Untimely recording of vendor invoices
Inaccurate financials sent to investors
Do you think investors will want to give your company money if they don’t trust the finances? And can you make efficiency improvements if you don’t even know the true financials? It will certainly make these a lot harder…
Cost savings from offshoring is often less about replacing local resources but rather supplementing them in order to have a fully staffed team within the budget constraints.
You save money AND hire more resources to fully build out the team you actually need.
2. Lack of Local Talent
There is a growing shortage of good accounting talent in the U.S. and Europe as less people go to school in accounting while the demand for accounting talent has increased.
In 2022, ~300,000 accountants/auditors left the profession while only ~50,000 entered it.
Number of candidates taking the CPA exam is the lowest since 2006.
The number of CPAs in the US has fallen by 17% in the last five years.
There are several ways to build a successful offshore talent strategy. You just need to carefully consider what your strategy will be and how you will manage a global company. Every company will be different here but I have seen a lot of different strategies work well.
3. Time Zone Advantages
One of the biggest concerns with offshoring talent is with the time zone differences. This is why some companies prefer to hire “nearshore” in countries close to them that are similar time zones. For the U.S. this is often Latin America.
Nearshoring is a great option - OnlyExperts finds accounting talent in these locations as well.
But companies shouldn’t automatically ignore other countries as part of their offshoring strategy because they are in a very different time zone:
Overlapping working hours. Many offshore candidates are used to having some overlapping working hours with U.S. or European time zones. Ranging from 2 hours of overlap to committing to a complete overlap of working hours (the graveyard shift in the Philippines is super common). In finance, I have found that just having some overlapping time is all that you need.
Lower cost, better talent. There are great people in nearshore locations, but including other countries will help you find the very best talent and at a lower cost.
Near 24/7 working coverage. Hiring in different time zones enables continual progress on things like closing the books. Teams can build out plans so there is continual progression and minimize the waiting game of other team members to finish their areas in the month end close process. I have found this super helpful in accounting.
The above might not be as true for all teams, but I have found different time zones can be an advantage for finance teams when proper planning is done. While there certainly can be disadvantages, I think the advantages can often outweigh them.
4. Hardworking, Committed, and Experts
Many people are surprised about the quality of accounting talent you can find overseas. Often companies have used offshore folks for simple data entry or some other entry level stuff, but there is some top tier accounting talent out there:
Excellent communication and English skills
Familiar with U.S. GAAP and technical accounting
Big 4 audit experience
Worked with US and European companies
Experts in QuickBooks, NetSuite, Xero, and other accounting tools
All of the above, for just 20 - 30% the cost of a U.S. hire equivalent.
Efficiency plummets when you have high turnover in any department, but it is especially true in finance. In my experience the average tenure of offshore hires can be much higher than U.S. hires.
Other Offshoring Considerations
Hiring people in foreign countries
A lot of companies don’t know how to start hiring overseas and there is a fear of compliance, HR, tax, etc. Other offshore placement firms will tell you that they can “manage it” for you and charge you $3k+ per month for a hire that they are only paying $1K per month.
You don’t need to do this and overspend on offshore talent…
OnlyExperts doesn’t do that because there are 3rd party companies that make hiring people in other countries SUPER easy. Companies can just hire these offshore candidates directly and use a Remote.com or Deel.com to manage the hire. Super easy and way less expensive than what many offshore recruiting firms will charge.
I think of hiring in foreign countries as three levels of compliance — the timing (number of hires before being pushed to the next one) can be country specific:
Hire as contractors
Cheapest and easiest to manage as you just pay like any other contractor.
Hire under an employment of record (EOR)
As you have more full-time people then hiring under an EOR will prevent compliance issues. This is more expensive than #1 because you pay them as employees (taxes, benefits, etc) and there are EOR fees. This is what companies like Remote.com or Deel.com do really well.
Set up an entity and directly employ the hires
Once there is a critical mass of employees you should consider setting up your own legal entity and employing everyone directly. This can be very time consuming and expensive. Consult your legal and tax advisors…
Given how easy #1 and #2 are by using a 3rd party, OnlyExperts doesn’t increase prices for it and just lets companies manage it directly. Once you have a foreign entity then a new hire would just follow the process you have set up for that country.
NOTE: Not legal, tax, or payroll advice. One of the firms I mentioned above or your legal counsel can help you.
What are offshore accounting salaries?
It depends obviously on location. Some locations can be just as much or even more than the U.S. after you factor all the other costs with operating in specific countries.
Below shows the salaries of different countries for a senior software engineer. At a high-level this roughly lines up with my experience of the differences in countries for most other roles as well.
You can clearly save a lot of money and get great talent if you build a good global hiring strategy.
Check out OnlyExperts
Check out OnlyExperts and get 20% off by telling them I sent you. It’s super easy to get started and you only pay a placement fee if you hire someone so there is no risk in checking it out.
My friend SecretCFO is also partnered with OnlyExperts - go check out his newsletter as well to learn more about building great finance teams.
Footnotes:
If you have any questions on offshoring or you want to try OnlyExperts then you can also reply to this email and I will get you to the right person.
Reach out directly to the team at info@onlyexperts.com
***nothing is tax, legal, or any other type of advice
We have a few teams in the Philippines and can confirm they are bloody brilliant 👌. But, finding the quality through the quantity can be a challenge, so I can see how a partner like OnlyExperts can provide a super valuable service 🙂.