When CPA firms decide to add offshoring as part of their strategy, they often approach several third-party providers across different countries to understand their capabilities and identify the "best" provider out there.
As someone who has been part of several such conversations, I have noticed that the discussion in many cases begins with the provider's capabilities rather than the firm's specific requirements.
How large is your tax team? What types of returns do they handle? What software do they have experience with? Do your professionals have CPA or CA qualifications?
These are all important questions. But the answers may be more meaningful when the firm knows and communicates what it is actually looking for at the outset. Are we planning on offshoring individual, business or trust returns, or a combination? Would we offshore only preparation, or both preparation and review? What level of complexity do we expect the offshore team to handle?
Would asking such relevant questions initially help firms evaluate providers with more clarity?
While a firm evaluates the provider's capabilities, it can also assess how the provider is trying to understand the firm's requirements. For example, when a firm says, "We need two tax seniors," Provider A may respond, "We have them ready for you." Provider B may instead ask, "What type of work do you plan to assign them — individual, business or a combination?" "What level of complexity?" "What do you expect a senior to handle independently?" The questions Provider B asks may indicate how providers can approach the same requirement differently.
Another example could be a provider asking, "Would you train our professionals?" The provider may be trying to understand not only the firm's requirements, but also how the firm expects to work with the offshore team once the relationship begins.
Relevant experience matters more than experience on paper
A provider may send the resume of a senior with six years of U.S. tax experience. But that does not mean she spent all six years working on the types of U.S. tax returns that the firm plans to delegate. The requirement may be for someone experienced in preparing and reviewing business returns, while the proposed professional may have spent those six years reviewing individual returns. Both represent meaningful experience, but they are not necessarily relevant to the same requirement.
When firms dig into details like these, they may be surprised to find only a handful of suitable professionals, even at a provider with a large tax team.
The number of professionals can indicate bandwidth. Years of experience can indicate experience level. Neither necessarily indicates whether the experience is relevant to the firm's requirement.
Assess more than just your people
There have been instances where firms selected excellent offshore professionals from a provider and still found that selecting the right people alone was not enough. Firms may also want to assess the operating model around those people: Who owns onboarding and integration? How are escalations handled, and who has the authority to resolve them? Are the provider's delivery leaders involved during the evaluation phase? What happens if the assigned professional doesn't work out? Who from the provider will be responsible for managing the relationship, and has that person been involved during the evaluation process?
Questions like these allow firms to assess the provider's operating model and look beyond the sales conversation.
Ask better questions of references too
Most firms ask for references during the evaluation stage. But how effectively are those references being used? Generic questions such as "Are you happy with the provider?" or "Do their professionals have the necessary tax knowledge?" may not uncover what a firm specifically needs to know. More specific questions can help firms gain perspective from another CPA firm that has already worked with the provider.
For example, "How well do they understand your firm's processes?" can offer perspective on integration. "Where could they perform better?" may reveal weaknesses. And "How have they responded when you escalated an issue?" can tell you how problems are actually handled. If you already have an offshoring arrangement in place, what questions would you ask if you were evaluating your provider afresh, knowing what you now know?
Indicators for the shortlist or for fit
Firms may look at several indicators while evaluating providers. For example, Provider A may charge more than Provider B, but a higher price doesn't necessarily mean premium quality. Provider A may have additional data-security credentials, but once a firm's security requirements are met, having those additional credentials alone does not necessarily make Provider A the better fit. Some indicators may be important, and others may even be mandatory criteria. Meeting them may put the provider on the shortlist. But meeting more of them does not necessarily make that provider the best fit.
I'm not suggesting that clearly defining requirements and asking better questions of providers and their references will guarantee a successful offshoring relationship. It won't because there are several moving pieces once the relationship gets started. But these steps may give firms greater confidence in how they approach the provider-selection process.
Maybe that's also why searching for the "best offshore provider" is not the best objective in the first place. The better question may be: Which offshore provider is most suitable for what our firm is trying to accomplish?
