Indian Tax Returns

Thanks to Brad Delong for this timely reminder of what ia was arguing earlier today: that India is likely to become the world's information hub. This time the outsourcing is legal, in every sense of the term. Large US accounting firms are sending the tax returns of US citizens to india for scrutiny. One interesting by product of this interaction between the US and Indian accounting professions can, of course, be improved standards all round.

In keeping with the great outsourcing trend that has swept across American businesses, thousands of US tax returns are now being processed in India, a development that has led to quite a stir in the accounting community. Numbers are hard to pin down, but according to Kishore Mirchandani, president of Outsource Partners International, the firm that claims to have triggered the development, more than 10,000 returns went to India for scrutiny this year. The accounting firm Ernst and Young alone is believed to have forwarded 7500 American tax returns to its subsidiary in India after transferring a tax partner familiar with US tax laws there. Scores of other smaller accounting firms have also sent returns numbering hundreds to India after a pilot study last year showed encouraging results. "The business is still in its infancy, but we are looking at over 100,000 returns going to India this coming year," says Mirchandani, whose firm has a 300-person operation in Bangalore and is looking to expand because of the growing demand. Several traditional American firms are also lining up to send returns to India, after pilot projects showed significant reductions in costs and turn-around times.

Firms also reported a 50 to 60 per cent cost reduction, besides improved scrutiny because they are able to hire better qualified people. In the US, simple returns are often viewed by junior staff who are not CPAs. Although the pilot studies of last year involved sending simple low end returns, some firms such as Toronto's Horwath Ornstein are now said to be sending high-end returns. In turn, firms are also posting Indian-American CPAs qualified in US tax laws to India to oversee the work. "The accounting profession in India itself has improved a great deal and quality should not be a problem," says Ram Ganesan, a Maryland-based CPA, who practices in the United States but sees outsourcing as an encouraging trend.
Source: Semi Daily Journal
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