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Automation vs Outsourcing: How to Determine Which Is Right for Your Firm

Competitive accounting and advisory firms are always on the lookout for ways to improve and streamline their business processes. Thankfully, there is no shortage of automation tools, technologies, and platforms to help firms run more efficiently. At the same time, outsourcing has become another popular solution to increase firm efficiencies. When evaluating automation vs outsourcing, often the best solution for a firm is a mix of the two that capitalizes on what each solution does best make the firm more productive and profitable.

With the rapid digitalization in firms, automation solutions that are easy to implement are surging. Automation can eliminate the menial tasks that teams have to do in order to perform their meaningful analytical work. Prior to this recent automation surge, many firms looked to solve the problem of overworked employees by building an overseas outsourced team to help.

It’s no wonder firms are turning to automation and outsourcing as solutions for their business processes. Automation and outsourcing share common goals:

  • Time savings

  • Cost reduction

  • Error reduction

  • Output increases

  • Project capacity increases

However, deciding which option to pursue is not always a clear, straightforward decision, creating the daunting task of determining which solution is best for a firm.

Both automation and outsourcing come with their own complicating factors that can erode the desired benefits. No one-size-fits-all solution exists that will be uniformly beneficial to every firm. Each organization must, therefore, understand its own goals, complexities, needs, and processes before determining what solution (or mix of solutions) to implement.

Automation vs Outsourcing: Factors to Consider

When examining automation and outsourcing options, ensure the best course of action by assessing the factors that impact a successful outcome. These factors fall under two general categories: your firm’s service delivery model and your firm’s objectives. Each of these considerations needs to be evaluated collectively, not in individual silos, so that the complexities involved in how they work together are fully understood.

Service Delivery Model

Processes and Outputs

How standardized are the tasks, outputs, and processes for the services you provide to clients? This may be answered differently for each service line you offer. If every project the firm takes on is truly unique with absolutely zero consistency across clients, automation might prove to be difficult.

However, even if each project is different, if there are standard elements, like a standard financial document request list or financial ratios, KPIs, and formulas that are used for many of your projects, then you have repetitive functions that are highly susceptible to human error. These are areas where automation can be very beneficial.

An Excel automation, like Strongbox, can instantly extract financial data directly from accounting systems and transform that data into a clean, formatted, and processed Excel workbook ready for your team to work with. Outsourcing these Excel steps is also an option, but keep in mind that outsourcing Excel data entry to non-accounting professionals may require a steep learning curve and extensive time commitment for training, custom instructions, and checking work, all avoided with an automation tool.

Available Resources

Additionally, what capacity do your various teams have? If your IT department is overwhelmed and needed for an automation implementation, outsourcing might be the better solution until there are internal resources available. Alternatively, if you have more clients than your analysts can reasonably take on and the firm is in the arduous position of having to say no to new business, fast-implemented automations that free up analyst time may quickly become the best option.


Capability here falls into two components: talent and technology. Adopting automation will require a certain level of technical skills from your team, including learning new software. Alternatively, working with an outsourced team may require coordinating files and instructions while navigating time zones and language barriers. Each requires unique training, so it’s important to understand your talent pool in determining which of those skills are most attainable and most valuable long term.

Technology capability involves your firm’s IT department and tech stack. Will an automation integration work with the essential tools you already rely on? Will adding an overseas team create a need for additional software licenses that may eat into the planned cost savings? Can the network handle the volume of a new automation tool or international access?

Your IT department should be aware of any planned software integrations to make sure compatibility, firewalls, and security are all going to be capable within the firm’s existing technology limitations and requirements. For overseas outsourcing, IT needs to be involved to ensure needed files and applications can be securely accessed in foreign countries with different networks, licenses, and regulations.

Firm Objectives

Saving Time

Both automation and outsourcing offer accounting professionals an opportunity to offload certain tasks to focus instead on more important elements of their work, but each come with their own time strains as well.

Automation software might take some time to set up in the beginning and require changing process documentation or providing team training, but once things are up and running, automation tools tend to be rather hands-off. Automation is always going to be significantly more scalable than growing a human team, so for firms looking to grow fast, technology is the way to go.

Outsourcing, on the other hand, can be onboarded pretty quickly but will require ongoing time commitments to manage a remote team such as creating custom instructions, dealing with human error or underperforming deliverables, and performance check-ins.

When making your decision, consider which approach, in the long run, will ultimately serve your firm’s goal of saving time.

Reducing Costs

No business decision can be made without considering the costs. Automation software tools for accounting professionals can vary greatly in price depending on the type of tool, the number of users, the feature package, installation or set up fees, or added customizations the firm opts to purchase. Be sure to understand how these costs will change and grow over time or if there are volume/usage discounts that can be applied as your firm grows.

Outsourcing tasks to a remote team in a country where labor costs are much lower can lead to a nice savings in payroll costs. However, this needs to be balanced with things like lost productivity if there’s high turnover and any tax, licensing, or legal fees needed to operate in that particular country. These, too, can grow and change over time.

Ultimately these costs need to be balanced with the time savings to have a full picture of which option is going to best for your firm’s situation.

Improving Efficiency

Reducing errors, increasing your team’s output, and growing the firm’s project capacity all result from improved efficiency. Outsourcing certain tasks can lead to improved efficiency if done correctly. Doing so requires clear lines of communication, easy file, data, and resource sharing, and transparent processes.

On the other hand, automation tools are designed to perform specific tasks with minimal input. Automation tools can be integrated with the tools and software you already use for a smooth transition that can be virtually invisible once implemented. Automation tools also do their job over and over without the risk of human error (in fact, with machine learning, automation tools tend to get more accurate over time,) making them a highly effective option in terms of efficiency goals.

When these repetitive tasks can be taken off the backs of accounting professionals, they can instead devote that time to meaningful analysis that the firm can bill for. Teams have more bandwidth to take on new clients and projects, so the firm gets the benefit of not only providing deeper analysis in a shorter time frame to their clients but also doing so for an increased number of projects. Clients are happier. Margins are larger. Improving efficiency is indeed one of the most valuable things a firm can do to positively impact its bottom line.

A Hybrid Approach

After evaluating your firm’s service delivery model and objectives, you should have a clearer picture of when, where, and how both automation and outsourcing can serve your purposes. But remember, the choice doesn’t have to be binary when weighing which of those purposes you prioritize. Frequently, the best approach isn’t either/or. It’s both. Implementing both automation and an outsourced team can be quite complementary and prove to be a highly effective choice for firms looking to grow and scale.

A firm may automate things like extracting financial data from clients and formatting that data into Excel but then use an outsourced team to implement custom formulas or to transfer that data to internal assets. Other times, certain tasks may be automated but also rely on an outsourced team for more complex clients that can’t or won’t work within the automation.

Here to Help You Achieve Your Goals

Regardless of your firm opting for automation, outsourcing, or both, the key to success is to fully understand your firm’s operations and goals holistically. Here at Strongbox, we’ve seen firms absolutely thrive using automation and a hybrid model. We strive to listen to your objectives and help find the way our automation software can best support your success. Contact us today for a free consultation to see how we can help you achieve your growth and efficiency goals.


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