How far can outsourcing to foreign countries go?

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By now it's routine for us to hear about jobs going overseas, or certain aspects of manufacturing or customer service being outsourced to countries like China and India. But now outsourcing professional services like accounting, engineering, and legal work is becoming big business.

Outsourcing professional services can save companies tons of moneys. Consider this example: An experienced lawyer in India will bill $75 to $100 an hour, which is a fraction of the cost of a domestic attorney. Accountants in India have been doing income tax return data entry for years, also at fraction of the cost of local help. And some of the more routine engineering work has been sent overseas for years as well.

The professional services rendered from overseas typically have been restricted to less sophisticated work, but the complexity of the projects is increasing as these contractors prove their worth. Quality of work is, of course, a big concern. But the verdict seems to be that many U.S. companies have been able to get high quality services overseas, leading to them increasing the amount of work outsourced.

Other concerns such as licensing of attorneys and confidentiality are legitimate, but there seem to be enough positives to this arrangement to keep it growing. Should domestic attorneys, engineers, and accountants be worried about this competition? Only if they're not providing enough value for their clients. So long as they differentiate their work product and make sure their clients are receiving enough bang for their buck, they need not worry.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.
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