- Hi, I’m Rahul Sahu, and I am a B.Com graduate with a Master’s in Indian Taxation.
- When my Indian Tax venture didn’t work out, I decided to explore the US market.
- The US offshore outsourcing industry is hiring Semi-qualified Chartered Accountants and B.Com dropouts, now.
Discovering the US Tax outsourcing industry
Before we go ahead you should know that I belong to a small town in India, where opportunities are not as plenty as in bigger cities.
After completing my graduation in Bachelor of Commerce (B.Com) and Master’s in Indian Taxation, I started my own Tax consultancy company in India.
We provided services related to ROC filing (the filing of audited financial statements, and annual returns, by the company to Registrars of Companies ), Goods and Services Tax (GST), and Income Tax returns.
When GST was introduced in India, clients had to file approximately 17 returns in a year. We used to charge INR 1000 per return so we used to do very well. However gradually the law changed and they had to file only 13 returns and eventually, it came down to 5.
From the client’s perspective, this is amazing however as a consultant we could hardly earn anything.
Now if I wanted to earn INR 10 Lakhs, I needed to obtain 200 clients. Unfortunately, I wasn’t able to get that many clients.
During the pandemic (2020), the situation worsened as we faced some revenue issues. I decided to explore other opportunities.
Upon researching, I discovered that 300k US accountants and auditors left their jobs in the last two years. Hectic work culture and employees’ interest in other career paths have led CPAs to lose interest in the accountancy profession.
Given how bad the talent shortage situation is, businesses, especially the US small and mid-sized ones are scrambling to find accountants and tax experts abroad, especially in India, Mexico, Pakistan, Philippines.
Talking about India, we have the largest number of youth who are hungry to learn and earn. Apart from 3.5 lacs qualified Chartered Accountants from ICAI, India has a large pool of skilled people in accounting, auditing, and tax services in general.
That is why many US CPA firms have been outsourcing their non-core activities such as accounting and taxation to India. It looked like an untapped market.
I closed my consultancy and joined an outsourcing company, that catered to US clients with Tax Planning, Tax Preparation, and Tax Return Reviews. This opened up a new avenue of opportunities for me.
From EY GDS to a US-based outsourcing company
After six months of handling various tax filings and back-office operations for US clients, I wanted to understand what it’s like working for larger clients.
The timing couldn’t be better, and soon I received an offer from EY’s Global Delivery Services (GDS).
(GDS was established to provide support to EY’s country practice offices. Maintaining employees at EY’s US office can be costly, which is why certain business processes were outsourced to EY GDS to increase profitability.)
I joined EY GDS to work on SALT (State and Local Taxes) return preparation. SALT is linked with the federal income tax deduction for state and local taxes that can be claimed by taxpayers who choose to itemize their deductions.
I mainly prepared Form 1065, also known as the US Return of Partnership Income Form 1065. Form 1065 is primarily used to report the profits, losses, deductions, and credits of a business partnership.
I eventually grew bored at EY GDS, as I had only to prepare one type of tax return. I wanted to broaden my horizon and explore different areas of Corporate Taxation.
I interviewed at a Florida-based Indian company providing finance, accounting, and tax outsourcing services to CPAs, Enrolled Agents (EA), and accounting professionals. Their mandatory requirement of a candidate was to have 3-5 years of experience in a specialized area of US Tax. And I only had 6 months of experience during my time at EY.
Despite not matching their requirements I cleared the interview, because of my outstanding performance. The firm gave me a Senior position in the US Taxation department. (This can only happen in the offshore market, and not so much in the Indian practice.)
They cater to North America, Australia, New Zealand, and Singapore with 22 branches across India. I am working in their Ahmedabad branch
The work is hectic during the US tax season. People often appeal for an extension of 6 months for tax filing.
There is also off-season work, such as streamlined filing (US citizens who haven’t filed their returns in a couple of years require assistance). So there is work for me throughout the year, and I could not be in a better place, financially.
How US-focused outsourcing firms operate
The complete process involves:
- Receiving work from our US office
- Preparing the taxes in India, and then sending them back.
- The US team then completes the rest of the Tax filing process.
In the US, CPA firms take client privacy and security very seriously. Our company assures them that we maintain the confidentiality of their documents. We use Remote Desktop Clients, which is a remote desktop software, that interconnects with our client’s server.
Million dollar question is – Why does the US tax present such a huge opportunity?
Regarding Indian compliances, if I need to file a return, I can wait and do it after six months or a year. However, in the US, if you have an assessment number and are earning an income, you must file your returns.
The US has a multi-tiered income tax system, under which federal, state, and sometimes local governments impose taxes. This results in a wider range of tax forms.
Apart from individuals, corporations have different rules and stricter tax regulations.
During the tax season, CPA firms are flooded with work.
If you fail to file, pay, or make timely deposits of your corporate income tax return, the IRS imposes a hefty penalty.
In short, the US tax system is stringent, and the number of taxpayers, both corporate and individual, is huge.
If a firm in the US hires an accountant, they have to pay an average annual salary of $45,000 – $50,000. That is why many of them are outsourcing the work to India, as they won’t have to pay as much, while not compromising on quality.
Most importantly, it reduces their workload and allows them to onboard more clients.
Over the past years, we have seen an increase in clients from the US, Canada, Australia, and the UK. In a few years, Germany will also join them and outsource Finance and Accounting work to India because of the potential recession.
FAQs
Eligibility for Becoming Income Tax Return Preparer in India
- Previously many outsourcing companies required you to be an Enrolled Agent (EA) to prepare US Tax Return. An enrolled agent is a person who has earned the privilege of representing taxpayers before the Internal Revenue Service in the US.
- But now the scenario has changed. You just need to have taxation knowledge and analytical skills.
- They are hiring CA dropouts, semi-qualified CAs, and B. Com graduates.
Training freshers:
- Some companies, including my current employer, provide a three-month training to B. Com graduates, or others that join.
- They would give you a stipend.
- The best part is that, once the training period is over, they may hire you permanently.
What is the salary of US taxation jobs in India?
In India, outsourcing organizations usually charge their US clients between USD 25-40 per hour, with the Big 4s charging more. The client doesn’t pay the employee directly, the firm does; this would amount to paying USD 10 per hour to a Tax Accountant, while the Big 4s pay their employees a little more.
The client may sometimes ask for an experienced professional with over 5 years of experience. The salary in that case would be calculated accordingly.
- In terms of salary, growth is exponential.
- If you are a fresher or a professional with 1-5 years of experience, you can earn anywhere between INR 6 – 30 lakhs as an employee.
- If you are already making around INR 30 lakhs and want to work here as an employee, it may not be wise.
Closing…
There is potential for Indian Accountants in the offshore outsourcing industry, I would say.
During my time at EY GDS, I learned that its revenue amounted to 5.2 billion USD, and that was coming from only one department; Tax.
According to a report by Grand View Research, the global accounting outsourcing market size was valued at USD 88.6 billion in 2020 and is expected to grow at a compound annual growth rate (CAGR) of 8.5% from 2021 to 2028.
Research and Markets study also shows that the global market for Tax Preparation Services estimated at US$33.4 Billion in 2022 is projected to reach a revised size of US$44.7 Billion by 2030, growing at a CAGR of 3.7% over the analysis period 2022-2030.
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