Send it out: cost savings, efficiency lead reasons to outsource.

• Author: Rumrill, Amberly
• Position: Coverstory - Cover story

Good help is hard to find. The old adage rings painfully true for California businesses. In fact, a December 2005 CalCPA survey found attracting and retaining qualified staff to be the top business concern among California CPAs. As they struggle to overcome the shortage of qualified accounting staff, many professionals have turned to outsourcing to help them accomplish their short- and long-term goals.

This, despite the uproar outsourcing created among CPAs in California and across the nation just a few short years ago. But, for many, once the ethical debates subsided and disclosure requirements were clarified, the push and pull of economic realities, along with increasingly complex responsibilities, caused them to venture forth, sometimes head first and sometimes testing the waters with a toedip.

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In 2004, CFO Magazine found that 18 percent of the 275 finance executives surveyed outsourced jobs overseas, and that 21 percent of those who did or planned to outsource overseas would outsource finance and accounting functions.

And 56 percent of company leaders surveyed by Pricewaterhouse-Coopers in 2005 said they outsource tax services or plan to by 2007. Advisory compliance services and internal audits were outsourced by 37 percent and 26 percent of those companies, respectively.

California CPA recently approached CPAs across the state to learn how they have ventured into outsourcing--and with what results.

OUTSOURCING IN PUBLIC PRACTICE

For Tonya Casimiro, principal at Sacramento-based Fitzpatrick and Casimiro CPAs, Inc., the problem lies in attracting qualified personnel. F & C began outsourcing through the tax preparation software company it uses to process tax returns.

"They've been our tax processing software company for 20 years," she says. "I trust them."

The five-person firm outsourced 261 returns in 2005--nearly 50 percent of its total returns.

Lack of qualified staff also drove San Jose-based Petrinovich, Pugh & Company, LLP to begin outsourcing tax preparation during the 2003 tax season.

"The employment pool was really shallow," says partner John Kawamoto. "We were looking for new ways to get our work done, and it seemed like a perfect opportunity."

Kawamoto compares outsourcing individual returns to using a release valve. "There was a huge crunch during tax season and we outsourced the overflow."

Marc Parkinson, managing partner at Petrinovich, Pugh & Company and CalCPA chair, adds, "We do a lot of tax work, so the January to April timeframe is really busy, and we hire anywhere from three to five interns every year. Still, there's a buildup of work, and we didn't want people working until midnight, so outsourcing was the perfect solution. It just takes the pressure off of the staff to get all these returns out the door."

OUTSOURCING IN INDUSTRY

Payroll processing is the primary outsourced function for John Paul Mitchell Systems for simple reasons: "It's more efficient and cheaper," says Karen Hermanson, corporate controller.

The Santa Clarita-based company...