Outsourcing Accounting to LatAm vs. Philippines: What Should You Know?

Gone are the days when outsourcing was limited to manufacturing or customer support. Today, a diverse range of functions, including software development, graphic design, financial services, and even legal work, are outsourced to different corners of the globe. 

Accounting, a service that demands a high level of expertise and unwavering reliability, is among the most commonly outsourced functions.

As companies look beyond traditional offshore outsourcing destinations like India, Latin America (LatAm) and the Philippines have emerged as competitive outsourcing hubs.

Each region offers distinct advantages and presents unique challenges, making the decision of where to outsource accounting—or any other service—a nuanced choice. 

This article will explore the benefits and challenges of offshoring accounting to the Philippines vs. LatAm and discuss factors to consider when deciding between these two promising regions.

Offshoring Accounting to the Philippines vs. LatAm: A Summary

When it comes to offshoring accounting services, the Philippines and LatAm have positioned themselves as strong contenders. Below is a table briefly summarizing each region’s key benefits and challenges to help you quickly understand your options.

Benefits of Offshoring Accounting to the Philippines

The Philippines is one of the leading destinations for offshoring accounting services, and it’s easy to see why. Here are some compelling benefits that make the country an attractive option for businesses looking to outsource their accounting functions:

Cost savings

Despite its high-quality workforce, the cost of labor in the Philippines is considerably lower than in the US. This cost efficiency is especially beneficial for SMEs that must carefully manage their budgets.

Skilled workforce

The Philippines boasts a rich talent pool of skilled professionals, many of whom hold CPA qualifications and other advanced accounting certifications. The country strongly emphasizes education, meaning you can likely find highly knowledgeable and experienced personnel. 

Wide time zone coverage

The Philippines’ geographical location can potentially offer a strategic advantage in terms of time zone coverage. The country has significant time zone overlap with many regions, including Asia-Pacific (APAC) and Oceania. 

Given the country’s distance from the US, outsourcing to the Philippines can be a strategic choice if you need to extend the hours your accounting team is available. 

English proficiency

English proficiency is exceptionally high in the Philippines, as it is one of the country’s official languages. A strong command of English facilitates day-to-day interactions with in-house teams and ensures an understanding of complex financial terminology and nuanced accounting practices. 

Benefits of Offshoring Accounting to Latin America

LatAm has emerged as a formidable player in the outsourcing landscape, offering unique advantages that make it an appealing choice for businesses looking to hire remote accountants. 

Here are some key benefits that underscore why LatAm may be the ideal destination for your accounting needs:

Large talent pool of highly skilled professionals

LatAm has a large and diverse talent pool of highly skilled accounting professionals. Many of these individuals hold prestigious qualifications, including Certified Public Accountant (CPA) credentials, and have trained under rigorous educational systems. 

The region’s strong emphasis on professional development ensures an experienced workforce ready to tackle complex accounting tasks and offer valuable financial insights. 

Seamless collaboration due to work culture alignment

One of the standout benefits of offshoring to LatAm is its business culture alignment with US companies. Shared practices, values, and work ethic make collaboration smooth and efficient. 

This means that expectations are more easily met, and the likelihood of misunderstandings is reduced, increasing the likelihood of project success. 

Geographical proximity and time zone similarities

LatAm’s time zones are closely aligned with those of the US, enabling real-time communication and quicker turnaround times. It’s easy to synchronize work schedules, conduct meetings, and manage projects, ensuring deadlines are met without extensive after-hours collaboration. 

Beyond just time zone similarities, LatAm’s physical proximity to the US offers strategic benefits for businesses looking to offshore accounting services. Shorter travel times make on-site visits, face-to-face meetings, and smoother logistic coordination easier. This proximity fosters stronger relationships, better oversight, and control. 

High worker retention

LatAm is known for its high worker retention rates, which are driven by strong work environments and career growth opportunities. 

High retention means better consistency and stability for your outsourced accounting team. Continuity leads to lower turnover costs, enhanced team cohesion, and the development of long-term professional relationships. 

Challenges of Offshoring Accounting to the Philippines

While the Philippines offers clear advantages, it’s important to consider the potential challenges that may arise. Here are some of the key challenges associated with offshoring accounting to the Philippines:

Cultural barriers

Despite the Philippines’ strong cultural affinity with the US, subtle differences still impact business processes and communication. These cultural differences can sometimes lead to misunderstandings or misinterpretations, especially in niche areas or industries. 

For example, the Filipino approach to hierarchical structures and decision-making can differ from US norms, potentially causing confusion or bottlenecks.

Time zone differences

There is a significant time zone gap between the Philippines and the US. Manila is 12 hours ahead of New York, posing a challenge for real-time meetings and collaboration. 

Therefore, you may need to implement flexible working hours or adopt asynchronous communication practices and tools. 

Attrition rates

One notable challenge in the Philippines is the relatively high attrition rate in the business process outsourcing sector. While it has improved in recent years, attrition in the Philippines is still higher than in most other popular outsourcing regions. 

High turnover can lead to disruptions in service, increased recruitment and training expenses, and lapses in quality of work.

You must work closely with your outsourcing partner to develop strategies to combat poor retention. 

Challenges of Offshoring Accounting to Latin America

Like any outsourcing destination, LatAm comes with its own set of challenges. The good news is that partnering with an experienced nearshore service provider can effectively address these challenges. 

Here’s a look at some challenges and how working with the right partner can mitigate them:

Dealing with compliance requirements

International compliance requirements can be daunting, particularly in the financial sector. LatAm has diverse regulatory environments, and staying compliant with local laws, data protection standards, and international accounting norms can be challenging. 

An experienced LatAm outsourcing company has dedicated teams to meet local and international requirements, reducing the risk of penalties or other issues. 

Accessing local talent networks

Finding and hiring top-tier finance professionals in LatAm can be challenging without an established presence or understanding of the local job market. The variability in talent across different countries can complicate your recruiting efforts. 

With a nearshore outsourcing partner, you can access extensive networks of skilled workers who meet your specific needs.

Ensuring quality of talent

Without any experience hiring in the LatAm region, it can be difficult to sort through the different educational backgrounds and professional certifications of remote workers located there.

Nearshore providers rigorously vet candidates through comprehensive screening processes and technical skills assessments. They ensure only the most qualified and capable professionals join your team, maintaining high standards. 

Why Choose LatAm?

Which is the better location for outsourcing between the Philippines and LatAm? The answer depends on your business goals, budget, and specific accounting needs. However, there are several reasons why more and more businesses are choosing LatAm:

• Educational standards: LatAm universities have rigorous finance programs, producing graduates with a solid accounting foundation and practical skills.
• Bilingual capabilities: Many professionals are fluent in English and Spanish (and some in Portuguese), facilitating smoother communication and expanding your market reach.
• Proximity: The region’s close geographical proximity to the US allows for easier management and oversight, including the ability to make quick trips for on-site visits and meetings.
• Innovative solutions: LatAm professionals are known for their innovative approach and adaptability, often bringing fresh perspectives and new methodologies.
• Strong data security: Latin American countries adhere to international data protection standards, ensuring your financial data is securely handled.
• Economic stability: Countries like Chile, Costa Rica, and Colombia offer economic growth and stability, providing a favorable and reliable business environment.
• Government incentives: Many LatAm governments offer incentives, such as tax benefits and training grants, to attract foreign businesses.

Given these competitive advantages, it’s clear why LatAm stands out as an attractive destination for offshoring accounting services. 

Final Thoughts

Both the Philippines and LatAm can be excellent accounting outsourcing destinations. Now that you’re equipped with knowledge about their advantages and challenges, pick the region that best suits your company’s unique priorities and business objectives.

Regardless of which region you choose for your offshore accounting, the most important factor to success is partnering with a reputable outsourcing provider. A reliable partner will help you ensure compliance and provide access to top-tier remote talent.

Ready to explore how Near can help streamline your accounting operations in LatAm? Book a free, no-commitment call with our experts today.