Legal and Accounting Outsourcing to India: Issues with Accounting and Legal Outsourcing

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While there are undeniable benefits to outsourcing accounting legal work to India, there remain a few issues that companies and BPOs have had to contend with. The following are a few areas that need to be addressed to make outsourcing an easier choice for companies.

• Security / confidentiality of information
  Financial, accounting, tax data or even legal data that is provided or made accessible to BPOs can be classified as sensitive information. Security of the data on account of technology used is one issue. This can be handled by using encryption methods and state of the art information security tools. The second aspect is the confidentiality of the information once it is made available to the employees of the BPO. The information could be subject to misuse and there have been some reports of BPO employees misusing the information. BPOs are dealing with this issue by making employees sign non-disclosure agreements. Companies must undertake due diligence while choosing their BPO service provider to see what kind of security systems and confidentiality measures are being used.

• Quality of work
  BPOs contend that the quality of work they provide is a lot higher considering they specialize in a particular field. BPOs frequently arrange training programs for their employees on software (Quickbooks, Intacct, Peachtree etc) used in the USA and other client sites to remain relevant and productive to their clients

• Control
  Lesser degree of control as it is easier to manage employees that are on the premises rather than outside service providers, especially when the providers are based overseas

• Additional costs
  Other costs involved in drawing up a legal contract for outsourcing and enforcing the contract

• Flexibility
  Possible loss of flexibility in reacting to changing business environment

• Contractual issues
  Issues related to the outsourcing contract – unfavorable length of contract, unfavorable terms and conditions of the contract, renewal of the contract etc.

• Issues with incorporating in India
  This would apply to companies that want to enhance the benefits of having an offshore service provider by setting up subsidiaries in India instead of merely entering into a contract with a third party provider. Details of the different types of business entities and the practical differences between incorporating in India and USA are provided in Appendix III.

(Source: http://www.cyfuture.com/disadvantages-of-outsourcing.htm)

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