“The industry will quickly move beyond 1040s. Both the vendors and buyers are at an inflection point on the maturity graph, and we expect tax returns preparation will drive penetration into a wider range of offshored professional accounting services.” – Arun Jethmalani, CEO, ValueNotes
Indian accountants are gaining expertise in preparing 1040s, 1065s and 1120s. ValueNotes estimates that in 2006, approximately 360,000 Returns were prepared by Indian vendors, garnering $40 million in revenues. Shortage of accountants and the grueling tax season are the prime offshoring drivers. CPA firms are discovering that Returns are not only turned around faster, but are also 40% to 60% cheaper.
ValueNotes Research estimates that in 2011, 1.6 million US tax returns will be prepared from India, for $200 million, for a largely 4-month activity. Significantly, Returns preparation is expected to lead the way for a host of other accounting services that can be effectively outsourced to India. These estimates are conservative and the potential is as high as 22 million returns that could come to India.
The offshore vendor landscape is made up of:
- Captive units of the Big Four: KPMG, PriceWaterhouseCoopers, Deloitte and Touche’ and Ernst&Young
- American facilitating firms / agencies with or without captives in India: Xpitax, SurePrep, CCH, IFR
- Large multi-service BPOs in India: Datamatics, MphasiS BPO, OPI
- Smaller multi-service BPOs in India: PB Tech Impact Solutions, Cosmic Internet Technologies
- F&A BPOs owned / controlled by Indian Chartered Accountants: GKM Management services, Business Accounting Services, Accountant Anywhere, Enablizer
According to Pratibha K, analyst at ValueNotes, “Facilitators like Xpitax and SurePrep are best positioned to service CPA firms, while Indian CA BPOs are well placed to operate as complete back-offices for accounting firms.”
ValueNotes has recognized three vendors as potential winners in this space: Xpitax, Business Accounting Services and GKM Management Services.
The report provides an overview of the buyer scenario and an in-depth analysis of the Indian vendor space along with profiles of major industry players. The report is designed to help:
- US CPA firms looking to outsource/offshore
- Global accounting firms and departments to gain understanding of the Indian vendor space
- Potential vendors / facilitators to assess opportunities
- Outsourcing consultants to evaluate and compare the offerings of vendors
- Returns preparation vendors to assess their competitive environment
- Venture Capital companies looking for investment opportunities
- Researchers looking for detailed information on F&A offshoring
This study is based on secondary data as well as extensive interviews with key people at various BPOs (captive as well as third-party) in India.