<snip
The argument of Chris Barrett, partner in a Malden, MA
accounting firm that offshore outsourcing keeps his firm
from having to lay off temporary workers in April is one of
the most ridiculous things I have ever heard.

Did it ever occur to him that at least some of the people
who seek such jobs were older semi-retired accountants who
did not want to work twelve months a year in the first
place?

As an aside, if Mr. Greenspan expects people to work to an
older age, where does he expect them to find jobs?

Some versions of economic theory notwithstanding, I see
offshore outsourcing as an unmitigated disaster. I fail to
see the mechanism that creates replacement jobs for those
thereby lost.

The only benefit here seems to be that the partners of Mr.
Barrett's firm make more money and those of their employees
who are lucky enough to keep their jobs have slightly more
interesting work to do.

--
To e-mail me get rid of the cats and dogs.

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Monday, February 23, 2004

More firms send tax return work to India
Critics warn that outsourcing costs jobs and risks identity theft

By RACHEL KONRAD
THE ASSOCIATED PRESS

SAN JOSE, Calif. -- Twelve-hour shifts and seven-day workweeks exhausted
accountants at Rucci, Bardaro & Barrett. But most painful for Chris Barrett was
the annual "Easter parade" -- layoffs of seasonal workers and interns after
April 15.

So Barrett, a partner in the firm in Malden, Mass., will send about 150 of his
600 clients' tax returns this year to India, where recent college graduates
will prepare Americans' 1040s. Barrett won't hire -- or fire -- any extra
employees, and the average turnaround time for completing returns is shrinking.

"We're always looking for ways to reduce the pressure," Barrett said. "It frees
us up to provide financial and estate planning, which we didn't have time for
when we were too busy filling out returns."

Tax experts say Indian chartered accountants -- the subcontinent's version of
certified professional accountants -- will prepare 150,000 to 200,000 returns
this year, up from about 20,000 in 2003 and 1,000 in 2002.

Critics say outsourcing short-shrifts U.S. accountants and exposes unwitting
Americans to identity theft, which the Federal Trade Commission ranks as one of
the country's fastest-growing crimes.

On Thursday, U.S. Sen. Dianne Feinstein urged major U.S. financial services and
accounting firms to be cautious about outsourcing sensitive work such as tax
preparation.

"I am gravely concerned that consumer data is being sent overseas without
proper safeguards," the California Democrat wrote to chief executives of
Citigroup, Bank of America, Ernst & Young, Equifax and TransUnion.

But executives argue that they can't afford to ignore the trend.

The average accountant in India makes $250 to $300 per month, compared with
$3,000 to $4,000 in the United States. Many firms say they'll use the savings
to undercut competitors or add premium services such as retirement planning.
They also say Indian workers will be needed to replace droves of retiring baby
boomer accountants.

"It's going to change the paradigm in which professionals prepare taxes, maybe
even more than the way TurboTax (software) changed the way individuals did
their taxes," said Dave Wyle, head of Newport Beach, Calif.-based SurePrep, a
software and consulting service with 300 Indian accountants in Mumbai (formerly
Bombay) and Ahmedabad.

In the late 1990s, the nation's biggest accounting firms began sending bits and
pieces of tax work to India -- lists of itemized deductions or schedules of
profit and loss -- primarily for multinational companies and U.S. citizens
living abroad, said L. Gary Boomer, a consultant for accounting firms.

But in the past year, they've sent thousands of individual returns to India,
where colleges graduate about 50,000 accounting majors each year.

Ernst & Young, which employs more than 1,000 workers in Bangalore, will prepare
15,000 of 100,000 tax returns abroad. Most are corporate returns. About 4,000
will be for U.S. citizens living abroad, and about 1,000 for U.S. residents,
spokesman Ken Kerrigan said.

Although firms have yet to report identity theft or fraud that stemmed from
outsourcing, privacy advocates cringe at the notion of scanning and
transmitting W-2 forms -- with the Social Security numbers and salary
information on them -- across a dozen time zones.

Democratic presidential front-runner John Kerry wants overseas call centers to
disclose their location -- the New Economy version of the "made in America"
label. Some consumer groups and privacy advocates say accountants should do the
same.

"If we believe in the ideas of customer choice and the market, disclosure
should be the starting point," said Chris Jay Hoofnagle, associate director of
the Electronic Privacy Information Center. "From there we could explore whether
the outsourcing nations have adequate data protection."

Ernst & Young customers must sign a document acknowledging that a foreign
accountant may work on their returns. But most firms don't make such
disclosures.

Accountants outsource by scanning clients' W-2s, 1099s, K1s and other records
and sending them to Indian workers through strongly encrypted e-mail or private
networks.

Indian workers complete forms obtained from IRS Web sites and transmit them to
U.S. accountants, who review, print and sign the documents, thus assuming legal
liability.

To protect privacy, tax consulting firms in India -- SurePrep, Datamatics,
Xpitax, Outsource Partners International and other firms -- usually have armed
guards outside offices. Entry is restricted by microchip-embedded swipe cards.

Bruce Carlin, managing partner at Carlin, Charron & Rosen, based in Worcester,
Mass., plans to outsource about 2,000 returns -- twice as many as last year and
a third of this year's totals. Unless the client asks, the firm does not
disclose that it outsources with Datamatics, Carlin said.

"The vast majority of people understand what's going on," he said.

A 1040 prepared in India can cost as little as $75 -- including labor, software
and hardware costs. In the United States, it probably would cost as much as
$150, Carlin said." (End quoted material)=


"Jack" - John H. Fisher - TaxService[at]aol.com
Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ
My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html

Where Ignorance is bliss, 'tis folly to be wise!=

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