Outsourcing Offshore Accounting to the Philippines: A Guide

Outsourcing offshore accounting services to the Philippines is a feasible strategy for resolving talent and skills shortages cost-effectively. But where should you begin, and how can you make it work? 

Here’s an end-to-end guide to help you find and select an accounting offshoring company that meets your need. Plus, we also prepared some tips on how you can best manage your offshore team even if you’re miles apart. 

In this article, you'll learn:

• The definition of offshore outsourcing  

• Why is it cheaper to outsource in offshore locations? 

• From start to finish: Guide to outsourcing offshore services 

a. Preparing an outsourcing plan

b. Choosing a service provider

c. Managing your offshore accounting talent 

• Why choose the Philippines? 

• Expand your accounting practice with reliable accounting support  

What is offshore outsourcing?

Offshore outsourcing is the practice of hiring external service providers from another country. You can usually find offshore outsourcing companies in countries outside your geographical region or in places with different time zones from your home country. 

An example of offshore outsourcing is when you're from the United States and you outsource certain tasks to the Philippines. 

Note that outsourcing, by itself, is simply about the business activity of delegating tasks. It is further subdivided into three location-based outsourcing models: onshore, nearshore, or offshore. Each of these outsourcing models corresponds to a certain proximity to where your business is located.  

To give you a clearer picture of their differences, check out the table below. 

Read Next: 7 Reasons Why You Should Work with Offshore Accountants

The services you can outsource from offshore locations depend entirely on your needs. It can range from basic and administrative tasks (e.g., tax preparation) to specialized and expert-level functions (e.g., advisory services). 

But of course, offshore outsourcing is just like any business activity. To succeed in this initiative, you need enough planning and preparation. Deciding where to outsource is also essential because it has direct correlations with cost, service quality, and client experience you'll receive throughout the engagement. 

Why is it cheaper to outsource in offshore locations? 

Of the three types of location-based outsourcing models, offshore outsourcing tends to bring you the highest cost savings.   

Why is this so?  

The price differences in services between outsourcing destinations are often the result of their varying cost of living and labor wages. 

Developing countries like the Philippines (offshore), for instance, have lower labor costs and cost of living compared to developed countries like the U.S. (onshore). Some of the prime offshore destinations also offer tax credits and incentives, which is helpful for lowering operational costs. Because of this, you're able to outsource services of the same quality for a lower cost.  

However, the location alone does not give you a 100% outsourcing success rate.  

 While your choice of location can help you cut costs, you still need to make the necessary preparations and decisions before you start an outsourcing engagement. By doing so, you can find the right offshore outsourcing company that aligns with your goals and requirements. 

To help you get started, check out the offshore outsourcing guide below. This guide is divided into three sections — preparing an outsourcing plan, choosing a service provider, and managing your offshore accounting talent — to assist you at whatever stage you are in your outsourcing journey. 

From start to finish: Guide to outsourcing offshore services

Sending accounting functions abroad must be an intentional act — something you do to improve your accounting processes, the quality of your services, and your bottom-line.

This business activity, while meant to save you costs, doesn’t mean that you can simply offload tasks to foreign service providers with the cheapest price tag. Instead, offshore outsourcing means building a long-term, meaningful partnership with another company you can trust and rely on.

To find the right outsourcing partner, consider following these steps. 

a. Preparing an outsourcing plan

Before you outsource, it’s essential to have a deep understanding of your business needs, the reasons why you need to outsource, and how you plan to integrate outsourcing into your existing strategies.  

1. Identify your business needs

Conduct a holistic assessment of your business to identify areas you can outsource. Look into its current capabilities, challenges, and goals. From there, determine which gaps can be resolved by outsourcing. 

If you’re managing an audit firm, for example, you may observe a limitation on your firm’s capacity to accept more projects during the busy season. With this information, you can decide if you want to accommodate more clients and if it’s smart to outsource seasonal audit support.  

2. Define your requirements

Once you have decided to push through outsourcing, list down your service requirements. This includes the functions you plan to outsource, the headcount and qualifications of your outsourced staff, software or tools needed, project duration, and other non-negotiables. Doing this can help streamline your process of sifting through different service providers. 

3. Set your goals and objectives

Figure out what you want to achieve by outsourcing. By knowing your goals and objectives, setting realistic expectations and metrics to gauge your outsourced team’s performance can be easier. You can also use this as a reference to see if your outsourcing initiative is successful or not. 

4. Choose an outsourcing destination

Allocate some time to do your research on different countries. You can start by identifying at least two or three countries. 

From there, check if their outsourcing and accounting industries are competitive enough. Some of the questions worth asking yourself can be: 

• Is their government supportive of its outsourcing industry? 

• Does their country produce enough accounting professionals each year? 

• What’s the country’s current economic and political condition? 

• Can their professionals speak my language well?  

• Are they culturally compatible with my company? 

• What’s the time difference? 

• Do they have local data security measures? 

• Do they have a strong internet connection and excellent facilities? 

• How easy is it to enter and navigate the country in case I want to visit my offshore team members? 

Knowing the answers to these questions is necessary since they can have long-term impacts on the cost, quality, and effectiveness of your outsourced functions. 

5. Draft your outsourcing plan

Once you’ve gone through the steps outlined above, make sure to create an outsourcing plan. Some of the items you can include are your:  

• eligibility requirements for service providers,   

• outsourcing risk mitigation strategies,   

• main contact person,  

• chosen country/shortlisted countries, 

• preferred communication methods, and   

• payment plans, among others. 

b. Choosing a service provider

Once you have a concrete outsourcing strategy, it’s time to start finding and selecting a suitable service provider that can properly implement it. Here are some ways to do this.

1. Shortlist potential service providers

Come up with a list of service providers you can potentially work with. To make this process more efficient, you can:  

• ask your network with previous or ongoing outsourcing engagements for referrals, 

• get quotes from active outsourcing directories, 

• join networking events and connect with representatives from outsourcing companies, or  

• join organized business tours. 

You can also do a manual online search, though it can be tedious and time-consuming on your end.

2. Send a request for proposal (RFP)

To identify which of your shortlisted providers have the most favorable terms, you can send them a request for proposal. By doing so, you can implement a more standardized and rational method of evaluating bids.  

3. Talk with your prospects

Take the time to meet with your prospective service providers, even virtually. Arranging a meeting is an effective way to learn more about the company, discuss your requirements, and ask specific questions about your prospect's ability to meet your needs. You can also use this as a way to filter out unresponsive providers.

If you can, we also recommend making an on-site visit since it can give you more idea about their culture and work atmosphere.  

4. Do your due diligence

Conducting due diligence is also important since it lets you investigate further your chosen provider’s legitimacy and credibility. 

Here are some of the key areas you may want to look into:  

• Compliance with data protection laws and other relevant regulatory requirements  

• Business continuity plans  

• Portfolio of previous projects  

• Legal agreements and contract obligations  

• Financial standing  

After gathering enough information, assess the information and select the service provider with the most favorable reviews, reasonable pricing, and quality of service delivery. 

c. Managing your offshore team

Aside from choosing a suitable service provider, the way you manage your offshore team can also influence the success of your outsourcing engagement. Effective outsourcing governance is necessary to secure positive outcomes.

To make outsourcing work for you, consider these best practices.  

1. Set SMART expectations

Inform your offshore team about your expectations based on the outsourcing goals you have identified at the beginning of the process. Make sure that these expectations are SMART (specific, measurable, attainable, relevant, and time-based) to help your team get on board with your business more easily. 

2. Understand the limitations of your outsourcing engagement

Outsourcing also has its limitations and challenges. To minimize its potential impacts on your organization, you must be familiar with the drawbacks you might encounter along the way and the appropriate actions you need to take.  

Read Next: 7 Common Challenges of Outsourcing Accounting Services + Solutions  

3. Maintain regular and open communication

Distance and time zone differences can cause friction in your outsourcing engagement. Thus, it's crucial to maintain regular communication with your offshore team. Doing so will not only prevent misunderstandings but also unnecessary delays.  

4. Measure your offshore team’s performance

You should also set key performance indicators (KPIs) to measure your team’s performance. Aside from knowing if your engagement is heading in the right direction, it also informs your team of the key areas they need to focus on and the quality of work you expect from them.  

5. Evaluate the effectiveness of your engagement

Set aside time to review your ongoing outsourcing engagement. When doing this, make sure to evaluate its effectiveness and alignment with your business goals. It's also a good opportunity to identify areas for improvement. 

If you notice any shortcomings at the end of your service provider, communicate it with your contact person and observe how they will resolve those concerns. Remember, a good offshore company provides excellent client experience through regular quality checks and corrective action methodologies. 

Read: A Look Through Southeast Asia’s Accounting Outsourcing Industry 

Why choose the Philippines?

Sending accounting functions to the Philippines can further increase the benefits of offshore accounting.  

One of the main reasons why it’s a smart move is due to the wide pool of qualified accountants in the country — something that countries affected by the accountant shortage may find appealing.  

Data from the Philippines’ Professional Regulatory Board of Accountancy showed that there are around 200,00 registered Filipino certified public accountants (CPAs). Before passing the licensure exams, these Filipino CPAs have first undergone through hoops and loops.

In fact, the education curriculum of most higher education institutions is based on global accounting standards. Many universities also implement strict grading policies for accountancy students. These trained them to be diligent at learning concepts and how they can be applied in a real-life setting. 

The Philippine government also gives strong support to its outsourcing industry. To encourage more foreign and local companies to start operations in the country, the government offers multiple incentives to lower business expenses. 

If you think the Philippines can be an ideal outsourcing destination for your company, read this guide to help you filter hundreds of service providers in the country: How to Choose Finance & Accounting Outsourcing Companies in PH 

Build your offshore accounting team

Are you looking for a credible offshoring partner that can support your CPA firm’s business operations? Consider working with D&V Philippines.   

For over 12 years, we have been working with professional services firms — providing them with qualified accounting professionals and increasing their ability to scale. We also have intensive quality control procedures for the continuous standardization and improvement of our service delivery.  

If you’re interested in learning more about our services, contact our team today.  

You may also download our free guide, Outsourcing: How to Make it Work, to know how we can help in achieving your company’s goals.

This article was first published on 26 February 2024 and has been updated on 13 May 2025 for relevancy and comprehensiveness. Edited by: Mary Milorrie Campos