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On to this week: So I am back from the AICPA FVS Conference in Las Vegas where I spoke about scaling your business model. More than a few colleagues told me (privately) about how they were outsourcing work to places like India and the Philippines. They gushed about the quality of the work, the quick turnaround, and of course, the extraordinary pricing.
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I set a goal to read 26 books in 2019. I reached that goal at the end of September. I did it by watching less television.
Not all that long ago, I recall when “outsourcing” was considered a four-letter word. Traditional service providers were adamantly against it. I remember an outsourcing discussion that caused quite a ruckus in a LinkedIn group that I managed.
That was then; this is now.
I recall outsourcing starting primarily with the advent of 409A work … then with fair value valuation work. In both cases, the pricing became commoditized more quickly than expected … hence the need to lower costs to maintain profitability.
Today, based on my conversations, all sorts of work is being outsourced. For example, practitioners are providing their Excel valuation and Word report templates to the outsourcing parties who then complete the necessary work to those specs.
I was told the quality of the work is high. Also, a plus is the time zone difference between the US and the outsourcing parties: work can be handed off at the end of our day, continued during their day, and be available for review our next morning.
But of course, a big factor is the pricing advantage. One person told me some divorce-related work he was billing out at $20,000 was only costing him $2,500 to produce. So even if that work becomes commoditized, there’s a lot of margin to play with.
And just to be clear, I am not judging anyone who outsources. And while I don’t think outsourcing is mainstream among practitioners yet, I expect it will become a lot more common as fee compression hits more of our BV service tiers.
What a difference a few years make.
Are you outsourcing your valuation work? If not, should you be looking into it?
I believe the answer is yes … especially if you are in a small firm that has not built a protective moat (Warren Buffet speak) around a specific practice area or industry niche you serve.
In real life
I know, anecdotes are not data. But I don’t think we’re going to get the data that supports the outsourcing trend – unless BVR adds an outsourcing question that can be answered anonymously on its best practices survey.
Also, we live in a digitally connected world where outsourcing is a growing trend in all kinds of businesses. Did we think BV services would be immune to outsourcing? And the real value we bring to the table, the intellectual property built into the templates and the delivery of the work product to the client, remains “at home.” The in-between stuff is just details.
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