Earmark Podcast | Earn Free Accounting CPE

Hitendra R. Patil joins Blake for an insightful conversation about the staffing shortage in the accounting profession, identifying overwork and lack of work-life balance as key issues causing high burnout rates. They explore potential solutions like dropping the billable hour model, measuring impact rather than hours worked, outsourcing certain tasks, and focusing on specific value-added services. Patil also describes how his company helps accounting firms efficiently leverage offshore talent.


Chapters
  • (00:47) - Hitendra Patil joins the show
  • (03:24) - Let's talk about CAS
  • (04:43) - What do you see firms call their communication with clients?
  • (12:19) - National Association of Tax Professionals 2023 study
  • (13:27) - CAS is vague and firms need to figure out what they want to offer from it
  • (14:17) - What is causing the accounting shortage?
  • (20:35) - How big of problems are the overwork and pay?
  • (25:01) - More and more firms are offshoring work
  • (29:34) - How long is offshoring a viable option?
  • (32:52) - What are the accounting student numbers in India?
  • (35:03) - Korn Ferry study on future shortages of working professionals
  • (40:13) - What is the real underlying cause of the talent shortage
  • (41:52) - Hourly timesheets and billing
  • (44:01) - How can accountants measure impact on clients?
  • (51:13) - Datamatics Business Solutions Inc.
  • (58:07) - Thanks for listening and remember to earn your free CPE on Earmark
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Connect with Our Guest, Hitendra R. Patil

LinkedIn: https://www.linkedin.com/in/hitendrapatil/
Twitter: https://twitter.com/HitendraRPatil
Facebook: https://www.facebook.com/HitendraRPatil/
Instagram: https://www.instagram.com/accountaneur/

Learn more about Datamatics Business Solutions, Inc. (DBSI)
Website: https://datamaticscpa.com/accounting-bookkeeping-outsourcing-for-usa-cpas/

Connect with Blake Oliver, CPA

LinkedIn: https://www.linkedin.com/in/blaketoliver
Twitter: https://twitter.com/blaketoliver/

Creators & Guests

Host
Blake Oliver, CPA
Founder and CEO of Earmark CPE
Guest
Hitendra R. Patil
Hitendra R. Patil is the President of the Global Finance and Accounting Outsourcing Services of Datamatics Business Solutions, Inc. (DBSI), providing services exclusively to CPA and Accounting firms. He is one of the Top 100 Most Influential People in Accounting, one of the profession's leading authorities on client accounting and advisory services (CAS / CAAS), accounting technology – including artificial intelligence, emerging technologies, and accounting practice/firm success. He is also the author of “Rise of The AiCCOUNTANTS™: The What, Why, and How of Artificial Intelligence (AI) for Accountants,” and “The Definitive Success Guide to Client Accounting Services (CAS), books he has written exclusively for accountants.

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Hitendra R. Patil: [00:00:00] I remember one of my previous, uh, clients in a CPA firm specializing in restaurants. Now, he would study the impact of, uh, weather patterns on production of pork skins. And then he would go and advise his clients, go and buy pork skin. Now, because you're using XYZ amount, you will save about five, 6000 if you buy. Now, can you believe that this was years ago? Just one piece of advice.

Blake Oliver: [00:00:24] Yeah. That's amazing. If you'd like to earn CPE credit for listening to this episode, visit earmark Cpcomm. Download the app, take a short quiz, and get your CPE certificate. Continuing education has never been so easy. And now on to the episode. Hello. Welcome back to the show. I'm Blake Oliver. Cpa joined today by Hitendra Patil. Jitendra, welcome to the program.

Hitendra R. Patil: [00:00:55] Thank you for having me. Brex black. So so happy to be here with you.

Blake Oliver: [00:01:00] I am very eager to speak to you because I've read your work for years. You're very prolific. You write in CPA trendlines pretty often. Is that like a regular column that you do?

Hitendra R. Patil: [00:01:11] Yeah, it's almost a regular column. It keeps churning out, I think, every week once on an average. And of course I do some other stuff as well. So but CPA trendlines is like more uh, preferred thing for me.

Blake Oliver: [00:01:24] So everybody who subscribes to CPA trendlines already knows that you are all about client accounting services. Yeah I like to just call it accounting services. Bookkeeping is another firm that some people use. Um, and I'm curious, like, how did you get into the world of client accounting services? You were there really early. It seems like, um, probably since I started, which was, you know, over a decade ago.

Hitendra R. Patil: [00:01:51] Right? Yeah. So bookkeeping was like a typical normal word so often used for, uh, the work that accountants do and, of course, taxes. And then you go and do audit different things. But, uh, having done, uh, bookkeeping work behind the scenes as an outsourcing service provider for many, many CPA firms, I kind of knew, like books is not something only for keeping books is for something to derive some insight and help the business owner to, uh, you know, take advantage of, uh, the, the mind and the experience and expertise of the accountants. Right. So I hated the word bookkeeping, although it's still the norm to call them bookkeepers, but I prefer to call them ledger controllers in the bookkeepers. Right. So that's the the thing that I realized that, look, if you control the books, you control the client as a CPA.

Blake Oliver: [00:02:43] And then you control the books, you control the client.

Hitendra R. Patil: [00:02:46] Right? Yeah. Okay, I like that. And. Yeah. And from there I thought, wait, uh, if I'm as a firm doing my own accounting, that's separate from the accounting that I do for clients, right? So everything we do to generate revenue is client accounting services, right? So that's how I think it came. I'm glad that the firm became very popular.

Blake Oliver: [00:03:05] Yeah. I mean, you were there before it was officially that firm. Um, what what do you think about Cass as the acronym? What do you think about client accounting services? Do you like that firm, or do you think it should be called something else?

Hitendra R. Patil: [00:03:18] I think, uh, it depends on where you are, which side of the story. If you're an accounting firm, you would want to call it likely Cass, because everybody is into Cass. But look at it as a client. They don't know what class is. And if you put that on your website, what does it mean? Right. Ultimately, it's coming to you for something. Maybe a balance sheet, maybe a tax return, maybe compliance, maybe advice, insights. Right. So it's like this, you know, when you have a dental problem I hope you don't. But what if your problem what will you search. Would you search like an orthodontist or something. That's hard for us. It's like, okay, let me find who is the dentist around here. And then you go to specialists, right? So like that, you know, people come to accountants for certain things. They are not thinking in these terminologies at all. This is for more to, uh, tell accountants. Look, go this way, go into advisory or go into full scale, full service accounting so that you can help your clients a little better so that terminology helps the profession. But from the other side, the client side, I don't think it means much.

Blake Oliver: [00:04:24] What do you call it when you talk to clients or what? What do you see firms doing that works?

Hitendra R. Patil: [00:04:29] Firms uh, do take umbrage under advisory consulting, uh, business advisory, but it's bookkeeping.

Blake Oliver: [00:04:37] A lot of it's bookkeeping. Right. So why are we calling it advisory and consulting?

Hitendra R. Patil: [00:04:41] Yeah. So bookkeeping is the base thing. It's like, you know, putting, uh, fuel in your car, but now you drive and you're not driving just for the heck of it. You're going from point A to point B, there is a destination, right? Otherwise, I don't know. It's on a Sunday morning. You're not going to work, uh, if you're not working from home and then you start driving, where do you go? You've got to have a destination, right? So bookkeeping is a vehicle that takes you to a destination. Without the vehicle, it will take you a long time to go there. Right? So it's an essential thing, but then you don't want to stop at just keeping the books right. You want to keep the client moving forward and advance. And for that you need, uh, insights from the books, connect them with the dots in the client's heads and then provide that advice. And that's why it goes without bookkeeping. Can you do advisory post facto? Then you're going back to the same old story, you know? Yeah.

Blake Oliver: [00:05:37] Everyone I, everyone I've talked to who started out doing just advisory services adds bookkeeping. Correct. Because if you don't control the numbers, you can't guarantee the accuracy of your advice.

Hitendra R. Patil: [00:05:50] Also, how do the numbers come to be? There is some decision being taken or made by the business owner or not made. And that reflects in the numbers and in the books, the transaction that you're entering. While you're looking at those transaction, you're wait, why are you doing this? Why are you buying this inventory so much when there is no sales? Right.

Blake Oliver: [00:06:11] Yeah. Well, and and you have to set up the books in a way that gets you the numbers. Yeah. That, that, that you're talking about. Right. And so if somebody else is doing the books and they've got the chart of accounts set up a certain way, it might not get you the the trial balance, the financials in the end that you need to deliver your consulting to give like useful information to the employer. And I see that a lot of the time with tax people who come from a tax focus set up the books to easily map into the return. But a tax return breakdown of expenses with a single line of revenue and just a bunch of opex operating expenses offers zero, almost zero value to a client from the advisory standpoint.

Hitendra R. Patil: [00:06:55] Same story. The destination is different. The destination is a tax return. Yeah. So that's for the government compliance, not for making the client better. Right. So your destinations are different. Of course tax return is a must. You can't get away without me filing one. Right.

Blake Oliver: [00:07:09] And so this is what I don't like about the messaging around CAS a lot of the time. Let me know what you think about this. Right. So just based on what we just said, most clients actually don't need consulting. They don't need advisory services. Uh, that's my opinion because they're too small and they know their business. They are often one person, maybe a few people, one person with assistance. Like a lot of accounting firms, most accounting firms are very small. Most small businesses are very small, and their business is simple and they don't plan to grow. And for that kind of business, all they need is tax compliance. That's why they hired you, right? They're not hiring you to be their coach. Correct. And if they want that, they go buy that from somebody who does coaching. And so then we set up the books and we don't think about that. We set it up maybe like to give them all these insights. And they don't want the insights. Correct. So so if that person just needs their tax return done and that's why you're doing the books, then just. Do the books to get the tax return done. Do the bare minimum. Right. And that means, you know, maybe you just do like essentially cloud based write up work. Mhm. And then for the clients who do need the consultative advisory services, that's when you actually do the monthly accounting. And you, you spend a lot of effort to get those books together and they will actually perhaps look at them. Right. Right. So, so all the from, you know, all the like messaging around Cass that I see from state societies and the AICPA is very focused on this advisory stuff. Mhm. But I would say 80% of businesses or more don't need it. And what they need is really just bookkeeping and taxes done.

Hitendra R. Patil: [00:08:44] Correct. Yeah. So that actually reflects in the way the profession's demographics is if you just go and, you know, take a snapshot of government data, for example, or Bureau of Labor Statistics or Census, you'll find almost 90% of the firms are less than 19 people, about 70 or less than five people. Yeah. And they're the ones who are really servicing this mass of mom and pop shop employers, right? They don't want to grow or they just want don't have the capital or the planning to grow. But there is this ten, 15% of each firm's client that can be growing, and those are the clients who will pay you more as a forward to the firm. And then if you're not able to offer a more insightful bookkeeping, plus additional or I would say, let's say advanced bookkeeping service, right, then you're going to be losing those clients to the firms that offer. Right? So there is going to be this settlement of, okay, all low end clients go to the kinds of firms that are not really doing anything on bookkeeping. They're focusing only on tax. Then the business is seasonal. Then of course, every.

Blake Oliver: [00:09:50] It doesn't have to be seasonal, because if you do the bookkeeping you can do that year round. You can. And then then you have the data when it's time to do the tax return, right. You have everything you need to do it. So there's not this huge compression that happens in tax season. Yeah, but why don't you start tax season with zero info and you have to get it all and then do the return in three months or. Well with the extensions it's obviously maybe it's six months by the time you get the info or whatever. But it's always compressed because you never get the info on time, correct? Correct. But if you do the books, you have everything throughout the year. Theoretically, if you do it right.

Hitendra R. Patil: [00:10:25] Yeah. But it's like, you know, you do your tax return and see you next year Mr. or Miss client. And in that case, if there's a business client, is the business going to pay you for monthly bookkeeping or are they going to bring those 12 months of, you know, backlog or behind the the work kind of, uh, books to you? And okay, now you do the books and file the taxes. So as long as you have those, uh, good enough clients who keep paying you to keep their books up to date, it's okay to just do bookkeeping for the ultimate destination of a tax return, but then you're not looking at advisory in that case at all unless you really, you know, have time and.

Blake Oliver: [00:11:01] Well, no, it's a kind. It's a kind of advisory. Yeah. It's just it's just very light advisory. Correct. Because it's it's what these clients need. They don't need somebody who's going to tell them when to hire employees or, you know, help them get business financing. They don't need a CFO. That's correct. They just need somebody to keep them compliant.

Hitendra R. Patil: [00:11:24] Correct? Yeah, absolutely. Yes. Absolutely. Yes.

Blake Oliver: [00:11:27] So maybe it's maybe the word is like compliance advisory or something like that.

Hitendra R. Patil: [00:11:30] Yeah. It could be a little bit of a, uh, not so planned tax planning I would say no, you're doing books 100 whatever, you know, every month, little, little bookkeeping. And you say, wait, you know, why are you spending this money directly? This could be a depreciable item. Whatever little bit of a tax planning can come into picture while you're doing bookkeeping, even for smaller clients. Maybe they don't pay you for that, but if you're able to show value, look, end of the year I would have saved you x thousand dollars by just, you know, me looking over your books while I'm doing that. Maybe you're already an advisory. Yeah, yeah.

Blake Oliver: [00:12:01] Yeah, I saw this report from the National Association of Tax Professionals recently. It's their their 2023 fee study. And it broke down. What percentage of revenues in tax offices or tax firms are derived from tax prep versus other stuff. And the the tax Prep is 70% on average. Um, the tax planning is only 5%. Yeah. Um, bookkeeping is only 12%. Um, like bookkeeping, monthly accounting. Okay. And that to me is just like the fact that we're calling it client advisory services or that's what CPA com calls it. And then we have, you know, only 5% of firms doing tax planning seems insane to me. Like we could just let's just do the tax planning. Right. Start with that. Right. Yeah.

Hitendra R. Patil: [00:12:53] But you you see, uh, if only 12% of the income is coming from bookkeeping, that is 88% books are being done by somebody else. And based on that, you're doing your tax returns, right? So then again, there's a rear view mirror, right?

Blake Oliver: [00:13:07] I guess what we're exploring here, what we've identified is that the definition of caste is, like incredibly vague and broad. Yeah. And I think firms need to. I mean, tell me if you agree. Firms need to know what kind of caste they're doing.

Hitendra R. Patil: [00:13:22] Yeah, exactly. I've been telling that. Look, uh, don't go by anything that you read in the market. You define caste for your firm. What do you want to do? What are your great at? What makes you, uh, happier? You observe yourself. Some work you do. And you're, like, always sweating. Oh, gosh. That's like that's not the work that you want to do. But whereas some other work really, you know, uh, excites you if that is falling within that caste umbrella, that's your cash. So you have to define cash for your firm and that will keep changing. You add more expertise, you add more staff. Maybe you get better, different clients. Your caste definition will change.

Blake Oliver: [00:13:58] So caste isn't actually what we were supposed to start talking about here today. Hitendra. Uh, the plan that we came up with that I totally derailed us from was to talk about the staffing shortage. But I guess this all ties together because Cass Bookkeeping is the number one growing service area in firms. I don't think we mentioned that it's over 10% of CPA firm revenues now. It's probably higher. I mean, because that data is years old. Yeah, it's growing rapidly. And so getting the staff to staff these Cass engagements, um, these especially do monthly accounting is really hard. It is. And so we have I think it's obvious I don't think we need to go over the stats. Everyone knows who's been paying attention that we have a talent crunch. We have a talent shortage in the profession. Uh, 300,000 accountants and auditors quit in the United States in the last few years. Right? So. I'm curious to know. I'm asking this of everyone I talk to. Atindra what do you think is the the disease that is causing this staffing shortage?

Hitendra R. Patil: [00:15:14] Good. I'm glad that you called it a disease because I start with the staffing shortage is a symptom of an underlying something. I don't know if we call it disease or whatever, but there is a cause, right? It's like this, you know, you have a body temperature that's not the disease. You go to a doctor and they figure out, oh, there is a viral infection. That's why there's a temperature, right? So the symptom in the cause, the symptoms are clear staffing shortage. That's measurable symptom. But what's the cause? And there are of course a lot of stuff is being said. The research is being done. A lot of actions are being taken by, you know, regulators as well as society is concerned with the profession. They're all trying to take actions. But what is the cause? And I was just talking to a really influential person in the profession, very much a thought leader. And it's like saying, look, we were hard work as a badge of honor in the profession. And that's not something that might really, uh, you know, impress the new incoming talent. You know, if you look at the number of students enrolling for the account, graduate degrees, you know, then that shows a constant decline. You know, I was just reading some numbers and it's like, uh, double, triple, uh, the ratio or rate of decline, uh, considering, you know, let's say 20, 1516 kind of averages. Right. Why is that? Right? So obviously the signals to the population are different. Accounting is a complicated profession. Maybe, uh, this requires a lot of hard work, and the returns may not be as, as good. Then there are other shiny professions that have come into being last 15, 20 years, technology, one amongst them. And then many other industries have these celebrities, right. You take technology. You got like massive stardom for some CEOs of those technology companies. Right? I'm still finding, you know, who is the celebrity accountant that every child in this country would know. Right. So we don't have those.

Blake Oliver: [00:17:10] Yeah. They don't know them as accountants. They know them as the celebrities. They became. Correct. But they like Bob Hope. Right. But very few people know that he was an accountant. Correct. Right. Yeah.

Hitendra R. Patil: [00:17:19] So that's a problem. Who do you look, uh, look up to when you are trying to decide? Oh, let me go in accounting. And the work is being perceived most likely as it's a grunt work. Uh, there's a lot of hard work. Uh, we don't know. It's just, you know, giving you a means of living. But then if you look at accounting as a profession that has a very high positive impact on the lives of people, that factor doesn't come out at all. Right. I know for Maryland CPA, you know who whose client was, uh, almost giving up on IRS notice, 260,000 something in dues. And she fought the case and brought the penalty down to five, 6000. Now, the person was willing to sell his house and become homeless along with the family. That's the impact an accountant can have. But this fact or the opportunities to impact lives, uh, is not really published anywhere. It's not visible. Right. So how do you how do you relate to that? So that's why the underlying disease is just reflecting in the symptoms. How do we figure out now you take, uh, for example, the job advertisement of an accounting firm and go and take a look at that. It's thousands grind, you know when you look at and.

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Blake Oliver: [00:18:30] Yeah. Yeah. It's true, it's true. Um. And the pay is not great, right? That's I when I look at boards like Reddit, which is a great place to go. Yeah. Um, you know, if you're older than me, you probably have never been on Reddit. Right? I'm 40 years old. Yeah, but, uh, you know, like. I got on there, I don't know, five years ago or something. And I started reading about accounting, and there's an accounting subreddit, and people post what they like and what they don't like, mostly what they don't like. So it's a great place to find out what people don't like. Right? And it comes back to two things that people complain about. They complain about the hours. They complain about the lower pay than their peers in their friends from college. Right. And then I think also like some of the complaints, just about like the, uh, the clients, the work, the firm, like it's very pain. It seems like there's a lot of pain every month around just getting what you need to do your job. Right? Yeah. And so it's frustrating. Maybe that's the word. It's frustrating. So. Are those. And so you're saying so those are the symptoms or the those aren't symptoms, but those are like what I have identified as the disease. Perhaps parts of it or maybe those are in our analogy. I don't know what those are. Right. Those are clues. You're saying the hard work is a badge of honor thing? That stuck with me. Hard work is a badge of honor.

Blake Oliver: [00:19:55] I was just talking with Peter Olinto. Peter Olinto, who's the, uh, you know, famous Becker, CPA, review prep, uh, host. Like tens of thousands, if not hundreds of thousands of people have taken his courses on CPA exam prep. And the thing that strikes me about, like his style is he talks constantly in the exam prep videos to encourage the students to get through it. He talks about the money, right? And it's hard work, right? But you're gonna you're gonna tell your girlfriend, sorry, I can't go on a date tonight and you're going to tell your family, sorry I can't hang with you. But guess what? It's all going to pay off in the end. And he's really good at inspiring people with that. Right. But then. That never ends in accounting, right? There's no like it doesn't stop after the CPA exam. It just keeps going. Once you're in as a as a staffer, as a staff, and then it keeps going, you know, all the way through. And even the partners are working long hours. I saw a study that said they were working longer hours than the staff. Mhm. So like people can't keep that up forever. Correct. Mhm. Right. Like I wonder if that is. People say time and money right. But I mean maybe I don't know. What do you think. Do you think. Do you agree with that? Is that what like do you see that problem in the firms that you work with?

Hitendra R. Patil: [00:21:15] Yeah. No. Uh, when I was growing up, uh, I heard, uh, kind of a proverb which says something like, you know, when you have teeth, you don't have hazelnuts. And when you finally can afford buying hazelnuts, you don't have teeth, right? So so today's generation has seen, you know, what's happening in the world, what's possible. They want to have the teeth and they want to have the hazelnuts when they have the teeth. Right. And a typical, you know, vacation travel for example, is part of the agenda for every single, uh, you know, person that's coming on board now. And at the same time, if you really relate that to the economics of the profession, I think accounting is still a profession that's among the top 20 most profitable professions in the country. So where is that money going? Right? Who is producing that money and whether it is equitably getting distributed to the right people at the right time? I don't know, I don't have the data and stats on that, but there seems to be a disconnect there. Right and.

Blake Oliver: [00:22:17] Right. The staff staff are paid on average $50,000 a year. Yeah. Um, uh, in some areas it's higher and in some firms it's higher, but on average it's like $50,000 a year, which is what it's been for 20 years or something. Right? Exactly.

Hitendra R. Patil: [00:22:32] In fact, I'm just running a recent survey on capital and it's still on. And initial results are showing that, you know, staffing shortage is number one. Uh, problem burnout is the effect. Work life balance is messed up. That's the effect. And to cope up what's happening, firms are turning away work strange. And at the same time, firms are also, uh, looking to increase the compensation to retain the staff. Why did you have to come to this to, you know, when the staff starts going, you increase. People say, yeah.

Blake Oliver: [00:23:04] Sorry to interrupt, but I hear this a lot. I hear that salaries are going up right. The shortage will cause salaries to go up. But maybe I see that happening a little bit. Yeah, but what I also see happening more is firms going offshore. So a great example is BDO, which is, I don't know, one of the top ten accounting firms in the country. And one of the biggest in the world is is doubling their Indian offshore operation from 2500 to 5000. And I spoke to the CEO of BDO, Wayne Bersin, and he told me, I don't know his exact words, but he said it was like a shame, to paraphrase him, that we have to we can't hire people in the US that we have to go offshore to do it. Yeah. You know. Right. And and like. It just seems crazy to me that, you know, we're a country of 300 million people and we say we can't find enough accountants, right?

Hitendra R. Patil: [00:24:00] So, in fact, I also spoke to Wayne quite some time ago, and he did mention that his India operations will be the largest for BDO in any country. By the way, I represent an offshore accounting outsourcing company right now. Yeah. And, uh, it's like globalization kicking in. You don't have talent, uh, in a place, but there is abundant of talent in another place, another country. Those boundaries are, you know, kind of dissolving. You know, people still have to go ahead, hire people, you know, service the clients. There is a need. You can't say, okay, we won't do accounting for anyone or less number of businesses. That's going to be having a bad impact on the economy. So people are looking at hiring in those locations where the supply is much higher and, uh, you know, get get along with it. And I heard from recent, uh, conference, you know, it was said on the stage, I would have been surprised if somebody said that on stage, let's say five, ten years ago, that, uh, offshoring or outsourcing, which used to be a pure profit play in those days ten years ago, has now become a survival play. And, uh, to hear that in a room full of, uh, accountants, obviously it reflects what everybody is hearing about.

Blake Oliver: [00:25:12] Right? I would agree with you. I would say that ten years ago, definitely 20 years ago, offshoring had a pejorative like it was. It was a negative connotation people didn't like. Every time you talked about offshoring, people would get a like a a look in their eyes and think it was because it was done very poorly for a long time. Yeah. That's right. Yeah. Um, and so the experience, you know, and the tools were bad, the technology was bad. The turnaround times were incredibly slow. That's right. Yeah. And so it was very frustrating. But now, you know, we can work asynchronously. And you know, it's still a challenge like I, I mean I work with somebody who is, uh, 12 hours apart from me. Right. So that's like coordinating schedules to get together is, is is a little challenging. Right. Um, but we've over we figured out how to do it better, especially now that we're all working remotely.

Hitendra R. Patil: [00:26:01] Absolutely. Yeah. Yeah. That helped. That helped the pandemic making everybody go remote. Uh, and people saw that. Look, everything is possible without being in the office. So whether somebody's not in your office is 10,000 miles away doesn't make a difference. Fortunately, technology is helping. And, uh, one of my favorite things to say is, look, when you do this arrangement, what you're doing is you're generating maybe 12 to 16 hours of productivity in a 24 hour day versus an eight hours day. Right? So your growth is being managed by this expanded capacity. And at the same time you're delivering the work in the same time zone. So it's a win win for most of the firms who are growing or who are intent on growing. For that.

Blake Oliver: [00:26:41] You said it's in the same time zone.

Hitendra R. Patil: [00:26:42] How does it. Yeah. So for example, India, let's say 12 hours behind, right. So when uh, US is sleeping, India is working. Right. And overnight you are getting the work done. So you're adding that you're not saying that. Look, whatever X number of people I have some of the work I'll take and give it to India or whatever country you're saying. I'm not able to handle the growth and I'm just, you know, turning away work. Instead, I will create a capacity in another country, which is what likes of Bdos and all Big Four have done for years and years together. Right? Right. So you're technically adding capacity to your firm to be able to leverage that to service the clients here in the US. Right. Which otherwise you would not be able to do unless you really hired a lot of people. And which is where talent shortage starts hurting, because now you can't hire at a reasonable price and hence maintain reasonable profitability and all that stuff. But at the same time, even if you want to pay more, you still can't find people. So what do you do then? Yeah.

Blake Oliver: [00:27:37] Well. So the offshoring is. It's a solution that firms have embraced because what else are they going to do basically? Right? They have no other option, right? Um, but I wonder how long will even the offshoring. Work, like solve the problem. Because, you know, Americans in a few generations have become more and more interested in, I would say, the, the finer things in life. Right? This is what happens as a civilization or as a culture develops. Right? You you go from all I do is work, eat, procreate and die. Yeah. To what I experienced when I visited Italy, which is we live to enjoy life and we work to enjoy so we can afford to enjoy life, right? Right. And that's that's kind of like the continuum of cultures. And, you know, America is a really young culture, right? And so we've kind of just gotten to this point where I think, like my generation is starting to say, no, we're not going to work eight hour days. Like it's it's like the old 12 hour day or the ten hour day. Right? We say we want to we don't want to commute. Mhm. Um we want to spend time with our families. We want to have time to work out. We want to have time for entertainment for ourselves. And work is just one of those things. It's not the dominant thing. Um, and so where I'm going with this is. We're not alone in that. India is. And the rest of the world, you know, is developing, too. And we have this global culture that's forming. So like, aren't aren't young kids in India going to, you know, demand the same things that Americans want and not want to follow the same traditional model. So I guess what I'm trying to say is if you take the traditional accounting firm model, here's my argument. Hitendra. Tell me what you think. If you take the traditional accounting firm model and you just export it to India, that's not going to work for very long. Mhm.

Hitendra R. Patil: [00:29:29] Okay. Great question. Uh, you know and it has different connotations. One, you know as long as there is this cost of living difference and the currency exchange rates favor your country, wherever you are, you'll always find, uh, talent available in the countries where it produces them in large quantities. Right, right. So that that gap, unless that gap kind of narrows the exact same, uh, experience that you're doing in having in us will not be there in that talent world in, let's say, in India and Philippines or Asian countries which are highly populated. Right.

Blake Oliver: [00:30:05] But think about it this way from an economic standpoint, right? Like if you're really talented and you live in India. Mhm. You can work from anywhere now. Correct. So there are more and more firms willing to hire people from anywhere. And what they pay you is more dependent on what you can bring them. If they're smart, if they're a smart company, they'll say, hey, I know he's in India and we could probably try to pay him a lot less because of the cost of living difference, but we're going to pay him us. Because that's what he can do. Maybe even more than what a US employee can do. Right. So like the All stars will be able to make really good salaries anywhere in the world, correct?

Hitendra R. Patil: [00:30:43] Yeah. All stars. Yes. Absolutely. Yes. Uh, but how many of, uh, the total population would be all stars? So you're still looking at a big chunk in the middle that is still available for anyone to, uh, take advantage of this, you know, differential. And because the talent is available and the numbers are mind boggling, right. The number of students that come out, uh, in accounting in India.

Blake Oliver: [00:31:07] What, like, give me an idea of this. I know that we produce something like in the US, 50,000, maybe 60,000 accountants every year. Mhm. Uh, and we have a deficit. I think we need like 100,000 every year. So it's a long big deficit. What are the numbers like in India?

Hitendra R. Patil: [00:31:22] I wouldn't know exact numbers but I'll just tell you some real numbers. You know you're talking of a population of let's say 1400 million people. Right. It's four bigger then uh, a few million, uh, graduates turning out every single year. I'm talking of tens of millions, of course, in different, uh, education fields in, you know, science and whatnot. But a lot of them are what they call commerce graduates. They're commercial. It's an accounting is a core part of that. Promising. That's a lot, you know, a proportion wise. So just in one Indian state, you would have so many commerce graduates that you might not find here, uh, in the entire year, coming out through various different colleges here. So the numbers could be 3 to 4 times more easily. That's my guess. I can get you the numbers later, but great question. No. Yeah, yeah.

Blake Oliver: [00:32:13] I mean four times bigger population. So even let's say even the number, let's just say the number of accounting grads is proportional, which is probably a lot more right. A lot.

Hitendra R. Patil: [00:32:22] More. Right. Yeah.

Blake Oliver: [00:32:22] So so let's say it's let's say it's double and then quadruple. Quadruple. Right. And we're talking about like half a million accountants every year coming out, you know. And that that would make up the difference. Just that, you know half a million let's say. Yeah. I'm just I'm just guessing here. Right, right. That would make up the entire amount of accountants and auditors we lost. Correct.

Hitendra R. Patil: [00:32:43] And plus India is a young country. The average age there of the published like 34, 35 maybe. So a lot of them are I think. Yeah, a lot of them are still in, in, in the working uh population. Right. 35th May be the average, let's say. Right. In that case, they're still going to be in the profession for a good 15, 20, 25 years. So a lot of population is still available working with good number of years of experience, five, ten, 15 years experience plus the new staff. So there is a big chunk out there. Yeah.

Blake Oliver: [00:33:17] I saw a study from Korn Ferry a few years ago that I talk about in almost every talk I do when I mention the talent shortage. Um, it's called the Global Talent Crunch, and they forecast that by 2030, the only major country in the world that will have a surplus of professionals is India. Every other country, the United States, Japan's already there, right? Um, Russia, um, the all the EU is there already. Even the even like the Philippines will have a shortage of professionals. India is the only country that will have a surplus.

Hitendra R. Patil: [00:33:53] Exactly right.

Blake Oliver: [00:33:54] And so I wonder. This might sound like a crazy thing, but in, you know, a few decades, maybe in another generation, will the big four accounting firms be headquartered? You know, in India.

Speaker3: [00:34:11] Hmm.

Blake Oliver: [00:34:12] Because they're workforce based on how they operate. Unless they change their business model. The only place that people are going to be able to hire is in India.

Hitendra R. Patil: [00:34:23] Right. It's like your manufacturing, you know, operations mostly being handled from China right now. Right, right. Yeah. So headquarters may be here. Apple is here. Yeah.

Blake Oliver: [00:34:31] That's a great that's a great that's a great example. Right. Right. We did this with manufacturing. Yeah. We decided that instead of building up more capacity here we're just going to send it all over to China because it's cheaper.

Hitendra R. Patil: [00:34:41] Yeah cheaper.

Blake Oliver: [00:34:42] And now we're doing the exact same thing with services.

Hitendra R. Patil: [00:34:46] Right.

Blake Oliver: [00:34:47] We'd be better off if we brought the people here economically, right. Because we'd get the benefit of the growth, but because we don't have. Because our population opposes immigration. You know, we we're going to send we're going to send the jobs overseas. It seems kind of crazy to me.

Hitendra R. Patil: [00:35:05] It is kind of. But it's like, you know, what's visible versus what's like, you know, hits your mind quickly. Say, you know, if you want to look at your t shirt that you're wearing and where is it manufactured? We we never look at that when you go and buy. Right. Most likely it's not manufactured here. We're okay with that. You know, we buy stuff. We buy headphones, we buy, you know, tools, furniture, whatever. Where is it manufactured? Right. We don't think too much. But when it comes to the educated jobs kind of stuff, we start looking at those things. Not a bad thing to do, but at the same time, what are we looking as a value? Is, is this whole thing producing value for us wherever that value is sourced from is not the real question, but are we getting the benefit of that value if that's like understood. Okay. Right, right.

Blake Oliver: [00:35:51] Well, and so in manufacturing when we offshored manufacturing we got the benefit of cheaper goods. Yeah. So our, our standard of living skyrocketed. And now if you are in like an upper middle class American or even honestly middle class, you can pretty much have all the toys you want. Yeah, right. Like you can have the big screen TV and the video game system and all the media and like, this is stuff that was unimaginable. But we also lost those really good jobs and now we regret it, like the labor movement in our country really, you know, is is trying to bring that stuff back. And now we're trying to bring it all back because we realize that, like, it doesn't help to have all these cheap goods if there's nobody to buy them.

Hitendra R. Patil: [00:36:32] That is correct. So it is a dual edged sword. While the commercial interests are served, you're still talking of the job opportunities and the livelihood, uh, opportunities for people. And whenever there is a possibility of a replacement or a displacement, you got to do something about it systemically, you know? So for the same example, you know, with AI coming in and all that, you know, there's so much fear of job losses and people need to be retrained, cross trained, skilled up and all that. So why are we talking that? Because there's a fear, right? Any, any, any adjustment that the industry does has to be seen from a wholesome point of view, not just one commercial angle. And obviously, you know, as an entrepreneur, you're typically looking at profit as one of the key motives. In that case, you're not going to look at this so much. But at the same time, what if an industry is facing a shortage like this where you can't meet up the demand, and that can have a devastating effect on the economy, people being noncompliant, you know, and not being able to leverage the knowledge of accountants to drive their businesses up or save their taxes or whatever, you're just leaving the population in a need that they cannot ever get satisfied because there is shortage. In that case, this is a good thing, that, okay, wherever it comes from, let's just do things that are required to keep things compliant, keep things doing, you know, going better and all that. That's okay. Right? But as long as you look at it that way, you know. Yeah. Yeah, yeah.

Blake Oliver: [00:37:59] No, and I don't I want to make it clear, I don't think that there's anything wrong with offshoring. Right. Uh, to me, if we go back to our analogy of the medical diagnosis, offshoring is like the stint or the they call it a stunt stent, stent, stent. It's like a stent that you put in to somebody's heart to keep it going. Right. It's absolutely essential and necessary and a good thing to have. Um, but it doesn't cure the underlying disease. That's right. Yeah. So can we go back to the disease? And, uh, I think if I could summarize what I said, it was like burnout is the number one cause of the disease right now. Um, would you agree it's it's is burnout the right terme? Yeah.

Hitendra R. Patil: [00:38:43] Burnout is the, uh, still the symptom or the impact of the disease? Burnout is happening because you're not having enough people, and your existing people have to stretch and stretch and stretch. That's that's what is leading to burnout.

Blake Oliver: [00:38:54] Okay. So burnout is a symptom. So what is the disease?

Hitendra R. Patil: [00:38:57] Yeah, the disease is, uh, what are you offering to the talent in terms of attracting them, keeping them happy on their definitions of happiness, not yours. Right. And, uh, making sure that your growth is planned in such a way that you're not going beyond those stretch limits that you keep defining. Right? Okay.

Blake Oliver: [00:39:21] So can I say overwork?

Hitendra R. Patil: [00:39:23] Overwork? Yeah.

Blake Oliver: [00:39:24] Overworking your staff causes the burnout. Correct?

Hitendra R. Patil: [00:39:27] That's right. And that might be because, again, you're putting your firm out there as if it's a very hard working firm or you're putting definition standard work definition. This is what your job is right. In tax season you're expected to work XYZ hours and whatnot. Right. And why is that? Because you want to maintain your profitability in whichever way, which means you might be selling at a lower price maybe. And that's why your profitability is lower. People are willing to pay more. Maybe you never dared to go and raise your. Prices. So there are a lot of these contributing factors that make it difficult for you as a firm to offer that good enough job to people who are incoming, right?

Blake Oliver: [00:40:07] So so let's what about what causes the disease? So, um, we have overwork. We have, you know, we're not creating the right work environment. What about hourly time sheets and billing? Because here's how I think that it leads to burnout. And you tell me what you think. So when you incentivize people and you measure people based on hours, the only way that they can. Do a good job is to build more hours. Correct. And the way they can, uh, stand out is to build more hours than anyone else. And that causes them to overwork themselves. And that leads to burnout. So is is dropping the hourly model a solution?

Hitendra R. Patil: [00:40:51] It could be, uh, depends on how you really are able to get pricing from your clients. You can still measure the productivity and all that. You can set expectation levels. Okay. This type of work should not take more than this time. But that's not the measurement. The measurement is the the impact or the outcome. How you produce.

Blake Oliver: [00:41:08] We don't we don't we don't measure that in our time sheets. We don't measure.

Hitendra R. Patil: [00:41:12] That in the time sheets. Exactly. So that's the.

Blake Oliver: [00:41:14] Problem. Most firms don't measure the the impact at all.

Hitendra R. Patil: [00:41:17] Right. Right. So and I believe, uh, for all my life accounting is an impact profession. So there is a big, uh, big disconnect there. But then so what do you measure then. Right. So you're looking at let's say you go to your client and say, okay, I'm going to give you a balance sheet or whatever, whatever. Right. So the client is looking at something I received this and hence I pay this. Now suddenly you say you receive the same thing that you received last year, but this year it has taken us six hours more. So you're going to pay more? The client might pay, you know, grudgingly, but it may not be happy. Right. So what do you measure? That's the problem. And maintaining time sheets you're spending in another hour. So seven hours of work and one hour of video creating time sheets. That's too much, right?

Blake Oliver: [00:42:00] Well, it's more like an hour at the end of the week, making up the time sheets that you should have kept track of the week during the week. And then anyway.

Hitendra R. Patil: [00:42:06] Then on top of it, end of it. When you start invoicing your clients, you'll say write offs, okay, I can't build this client so much, right? Let me write. Yeah.

Blake Oliver: [00:42:15] So so like okay, so you say accounting is an impact profession. We aren't measuring the impact. We should be measuring the impact. What should we be? How do we measure impact.

Hitendra R. Patil: [00:42:25] Measure impact in terms of what the clients are expecting. Right. Again going back to your initial thing that look, most of the clients are small businesses. They don't want advisory or anything for them. The impact is my tax return is good file timely, and I'm not paying more than a single dollar more than what I'm supposed to pay according the law. So that's still an impact. Like, you know, yes, we we assure you that you're not paying a dollar more than what you're legally required to. Okay, that's the satisfaction, right?

Blake Oliver: [00:42:51] And, you know, that's fair because, um, uh, studies show that Americans who do their own taxes spend. I forget what it is, but it's like days of time. So if you think about it, in a year somebody might spend like 1% of their life doing their taxes. And if you can give them back those like three days. Yeah. That's an impact. Yeah.

Hitendra R. Patil: [00:43:10] And especially with the newer generation who who values time more personal time. Family time. Even better. So you got to relate relate that to this. Look. You know by doing this here is what you get. Tax return is just a delivery.

Blake Oliver: [00:43:24] So yeah. Right. So then so then if we're if we're saying the impact is saving time for our clients, then we should be measuring stuff like how quickly we turned around the return.

Speaker3: [00:43:35] Right.

Blake Oliver: [00:43:36] You firms measure.

Speaker3: [00:43:37] This.

Hitendra R. Patil: [00:43:38] Uh, not really time because your experts, your professionals, you know, you will do the tax return maybe in one third of the time. One tenth of the time. Right.

Blake Oliver: [00:43:47] What? I'm what I mean by this when I say turn around, I don't mean from the from the firm's perspective. Perspective. I mean from the from me as the client. Let's say I'm the client. You're the firm entendre and I send you all my stuff, right?

Speaker3: [00:43:59] Mhm.

Blake Oliver: [00:43:59] How long does it take you to turn around my return.

Hitendra R. Patil: [00:44:03] That's true, that's true. Right. Correct.

Blake Oliver: [00:44:05] Do we measure that. Do do you know any firms that measure that?

Hitendra R. Patil: [00:44:08] I don't know what I remember people talking about. Look, I have a system by which you will know where your tax return is. It's in preparation. Yeah. It's getting reviewed. It will be filed tomorrow. It's filed. So you can see the workflow status as a client. So that's like an incentive for the firm to say, look, don't call me. You're going to be just disturbing me trying to find out. Hundreds of thousands of, you know, returns that we're doing here is what this is like the the typical Domino's pizza delivery system. You can track, right.

Speaker3: [00:44:37] The tracker. Yeah. The tracker.

Blake Oliver: [00:44:39] I've heard about this too. And I feel like that's really good to have. And I recommend every firm do something like that.

Speaker3: [00:44:43] Yeah. Right. Right. But but, you know, if.

Hitendra R. Patil: [00:44:45] I file my return and if I give everything, I'm waiting, waiting, waiting. Okay, I know, understand CPA firm has a big, uh, line of tax return, you know, to be prepared. But if I get my tax return done in six days, filed be done by 15th February, I'm out of that tax return cycle. I'll be happy then. Wait till the 10th April. Yeah, it's going, it's going, you know. So as a client. Yes. Absolutely. Yes. Yeah.

Blake Oliver: [00:45:11] So measuring the time it takes to get the return done, anything like what else could I'm just I'm just spitballing here, brainstorming here. Like what else could we could firms measure that would measure the impact on the client. And they could incentivize staff. Right. Like like get your team focused on that metric. Yeah.

Hitendra R. Patil: [00:45:29] So if you go beyond tax, you know, uh, the deadline uh, without deadlines for a thing, like, for example, you're doing books in accounting and all that, and you're putting a little bit of an effort to see what's happening with the business. Can you say as a firm, for example, you know, on an average, 60% of our clients see their cost of goods sold reduce by 0.75% because we are putting a strong attention on the cost of goods and we are giving that advice. So in the end, you're talking of 12,000, $15,000 in your pocket, more just by managing your finances better or making better financial decisions because we are giving you that insight. Can you quantify that? Most of the times you will see, you know, because you're handling the books, you will see the financial statements. What's happening are they are the forms? Are they are your clients growing? Or even if they're not growing, are they their bottom line is becoming healthier because you're putting your expertise to work. That is measurable, right?

Blake Oliver: [00:46:24] I 100% agree. If if you are doing consulting that's designed to help a client reduce expenses or grow their revenue, you should measure that across all your clients and know what that is so that you can tell your prospects, hey, this is this is the impact we have.

Speaker3: [00:46:39] Exactly.

Hitendra R. Patil: [00:46:39] Exactly. Right. Yeah.

Blake Oliver: [00:46:40] And I mean, even if, even if it might be a correlation, it might be causation. Yeah. But like either way, it's still it means something.

Speaker3: [00:46:49] It is.

Hitendra R. Patil: [00:46:49] Because as of now, I don't know how many firms really do that. And if a client goes to three different accountants and here's this only from one accountant, he's going to be coming to your weight. Yeah.

Blake Oliver: [00:46:59] Like if I heard you'd say, Blake, work with me. All of my clients are growing revenue on average, 10% per year, right?

Speaker3: [00:47:06] Yeah.

Blake Oliver: [00:47:07] So you're you're guaranteed to grow your revenue. And by the way, if you don't, then I will, you know, give you a refund of X months or whatever, right. Make it risk free for them. And then they go to the other accountant who says and they ask, so how much do your clients grow their revenue? And they're like, I don't know. I have no idea. Right? Yeah. Like, who are you going to sign up with?

Hitendra R. Patil: [00:47:27] Exactly right. And it is. Accounting is all measurable. Everything is numbers. Everything is measurable. Right. And of course it does take a bit of time. If you have like five, 600 business lines, it's difficult to keep track of all that data. But then you can still do it. You know there are tools. You know your pure gold Excel, Microsoft Excel will help you do that if you spend some time. But that's like a huge marketing, uh, you know, uh, USP that you will have. But this is just one example, right? It could be anything, not just, you know, cost saved or profit in. Crease or less money stuck in inventory for that matter, you know. And that could be a huge thing for inventory heavy businesses like restaurants, where perishable inventories can just go go spoil, right? So you can save a ton of money. I remember one of my previous, uh, clients, you know, a CPA firm specializing in restaurants. Now, he would study the impact of, uh, weather patterns on production of pork skins. And then he would go and advise his clients, go and buy pork skin. Now, because you're using XYZ amount, you will save about five, 6000 if you buy. Now, can you believe that this is years ago?

Speaker3: [00:48:34] Just one piece of advice.

Blake Oliver: [00:48:35] Yeah. That's amazing.

Hitendra R. Patil: [00:48:36] It was all no cloud, no automation, nothing pure Excel. Because this guy was interested in knowing where is this restaurant spending more money?

Speaker3: [00:48:46] I love.

Blake Oliver: [00:48:46] That example. Tejendra that is what a great. Yeah. So my takeaway from that is it doesn't have to be the whole world that you advise on. You can just become an expert in this one little thing for this type of client and just say like, it's sort of the same thing we do with tax, where we say, I'm going to minimize your tax liability in advisory. You can say, look, I'm going to minimize your Cogs for this industry because I know what it should be. And I know that you should be paying.

Speaker3: [00:49:10] Right, right, right.

Blake Oliver: [00:49:11] Or I'm going to do this to your revenue. Right. Or I'm going to do this for your I don't know if you if you focus on like air, it could be I'm going to do this for your benefits costs and cut that. So. I like that it simplifies things. It's a good place to start. Uh hitendra. Before we run out of time, I would love for you to talk a bit about the organization you're with helping accounting firms with offshore, uh, resources, because as we've discussed, it's really important. It's a necessity now, if you want to grow. Um, every firm I know that is growing is doing it. So. And I think it's really important that people know about you and your organization because you obviously know a lot about this advisory, bookkeeping line of work. And so, uh, you know, your organizations are set up to help firms that are growing that service line. Thank you, thank you.

Speaker3: [00:50:04] Yeah, thank you for asking that.

Hitendra R. Patil: [00:50:06] So I work with, uh, Data Analytics Business Solutions, Inc.. So we are headquartered in India with uh, servicing clients in UK, US, of course, Canada, Ireland, Australia and New Zealand. And we sell exclusively to CPA firms and accounting firms. We don't go to their clients. So the the fear of, okay, you are an outsourcing company, you might take away my client just not there.

Speaker3: [00:50:30] And that's good.

Blake Oliver: [00:50:31] What's the.

Speaker3: [00:50:32] Url.

Hitendra R. Patil: [00:50:33] Data matrix cpa com data matrix cpa.com.

Speaker3: [00:50:39] Data matrix I like the matrix data matrix.com.

Hitendra R. Patil: [00:50:43] Com yeah. So we're part of data matrix group which has been there for almost 40 plus years now India. And the group employs nearly 13,000 people, different companies all technology driven. The name itself suggests that everything is about technology there. And we have another company, corporate finance. Uh, outsourcing. Only that company is in, uh, Gartner's Magic Quadrant for the last two years. So we get leverage of that entire know how of how to control the whole processes, make it most efficient and all that. And plus, because we work only with accounting and CPA firms, our whole focus is, you know, how do we do this work better? How do we make sure that the work is very predictable, reliable, so that you can focus the same example of, you know, trying to find insights in the books while we're taking care of all that data intensive work, you know, your team members who are not happy dealing with lots of hard work or lots of grunt work, they can start applying their expertise onto client situations. In that case, your move towards advisory is simplified. And plus, of course, you know, you have this advantage of, uh, time zone differences, a little bit of a cost advantage, of course. So this is a growth engine that we provide to CPA firms. And again, I'm, I joined this company only because we sell only to accountants. All my last 18 years I worked only with accountants. So this is just continuation of me being part of the solution, you know.

Blake Oliver: [00:52:12] And how big or small can I be as a firm to work with? Datamatics if I'm solo, can I sign up with Datamatics? Do I need to be, uh, ten people? Do I need to be a certain revenue size? Like, how do you.

Speaker3: [00:52:25] So we do work.

Hitendra R. Patil: [00:52:27] With the smaller entities as well, but generally it's like this. If the work is predictable in terms of volume flow, it's good for the client, good for us as well. So that becomes a better value proposition for both ends. So we do work with smaller entities, but generally our sweet spot starts like at ten employees plus so that you have good number of lines. You might say, okay, 100 odd clients in business lines for which you do accounting for we do lots of, uh, tax returns.

Speaker3: [00:52:54] When you say ten.

Blake Oliver: [00:52:55] Employees, um, ten employees. Like, does that mean I have like a firm of ten here in the US, or does that mean I hire ten people in India?

Hitendra R. Patil: [00:53:03] Ten people in the US? You already have ten people. Okay, then you're looking at, okay, I can move maybe two, three people work there and absorb more clientele in, uh, the growth work because now most of the stuff is getting done in India. And data.

Speaker3: [00:53:17] Especially the.

Blake Oliver: [00:53:18] Monthly accounting, is being done overnight.

Speaker3: [00:53:20] Every day. Right? Correct. In India. Correct. So yeah.

Hitendra R. Patil: [00:53:22] The effect is very, uh, interesting. I did a lot of Excel calculations on this. So the moment you actually do this, your first increasing your profitability and you are releasing hours. So both put together when you start absorbing new client work, you can literally double your firm size in about two years by doing about 25, 30% of your work getting outsourced. So it sounds very, uh, very difficult to believe. But the moment you.

Speaker3: [00:53:49] Say that again. Yeah. So again.

Hitendra R. Patil: [00:53:51] Let's say you outsource about 25, 30% of your current work because you're not generating more profit from that work. And also it is releasing more time for your current staffing here. The number of new clients that you can sign up to fill up that time, uh, just the release sign will double your, uh, revenue in about two years time. And of course, if you keep growing and keep moving, you know, it keeps expanding. Your firms keep expanding. So we have had clients who which kept growing all the time. They started with just one FTE, as they call one full time. You know, going to 27, 30, 50 FTEs is not uncommon.

Blake Oliver: [00:54:30] I'm tempted to get back into accounting because I feel like with a combination of offshoring and AI, I could run a firm here with just me in the US and a team of people. Right?

Speaker3: [00:54:44] Mhm.

Blake Oliver: [00:54:45] Putting everything in the books every day, right at night. And all I have to do is get on the phone with my clients. And you know, obviously there's a lot of experience that goes into like being able to communicate the.

Speaker3: [00:54:55] Numbers to them. Exactly. Yeah. Right.

Blake Oliver: [00:54:57] It wouldn't take me a lot of time. Yeah.

Hitendra R. Patil: [00:54:59] So if you're entrepreneurial, you're good at marketing or at least, uh, convincing your clients, look, you know, don't worry about everything. I'm the one who's responsible. I'm going to take care. You don't worry about how. Any case, they don't want to know. How are you producing the clients?

Speaker3: [00:55:12] Yeah, I find.

Blake Oliver: [00:55:13] Clients don't care about the work being offshored because they know that it's happening, like in their social media. You know, they know it's happening with everything else. Like the fact that their tax work or their accounting goes offshore. As long as it's a reputable company.

Speaker3: [00:55:27] Exactly. You know.

Hitendra R. Patil: [00:55:27] Yeah, that's the key word there. Reputable, reliable.

Speaker3: [00:55:31] You don't want to go into.

Blake Oliver: [00:55:31] Like some random guy off of Upwork on his laptop. That's a cyber cafe.

Hitendra R. Patil: [00:55:35] That's exactly right. Yeah, yeah, that's a great point. You know, in fact, this the data security is so much so the zero level expectation in this business, you know, for me also, you know, if I have to start my work on my laptop company, provided I first have to log in to the company server. And from there you go, like, you know, so it's like controlled. Everything is controlled on my laptop because I don't want to, you know, make, you know, go to some random stuff and start working on something like from a Starbucks, for example. You don't want to go for accounting and tax work to such entities. You know, it's.

Blake Oliver: [00:56:07] Funny to me, that's still like a concern that people have because you got the same problem here in the US with employees. It's like exactly. It's no different. It doesn't matter where in the world you are anymore. The security can be exactly the same if you have the right technology stack.

Speaker3: [00:56:19] Got it?

Hitendra R. Patil: [00:56:20] Exactly right.

Speaker3: [00:56:20] Exactly right.

Blake Oliver: [00:56:21] Hey Hitendra, I want to be respectful of your time and I really appreciate all of your insights today. Um, thanks so much for joining me, and I hope to speak with you again soon.

Hitendra R. Patil: [00:56:31] Oh, absolutely. On some different topic of common interest for the profession. Thank you for having me. A fantastic talking to you. And this was really a fun conversation. And I can guarantee the listeners that this was not scripted. No questions, nothing. We just flew whichever way and like you be known to be asking thought provoking, you know, pot stirring questions, if you will. So thank you for that.

Blake Oliver: [00:56:56] Yeah. Thanks for the great conversation. I appreciate you, uh, uh, winging it with me.

Speaker3: [00:57:01] Thank you so.

Hitendra R. Patil: [00:57:02] Much. Thank you.

Blake Oliver: [00:57:05] Thanks for listening. I hope you enjoyed this episode and that you learned something new. And if you did, wouldn't it be nice to get some CPE credit for it? Well, I've got great news. My new app, earmark CPE, offers free NASBA-approved CPE credits for listening to podcasts, including this one. Visit earmarkcpe.com to download the app, take a short quiz, and get your CPE certificate. That's earmarkcpe.com.