Why Companies Should Outsource Accounting and Costing Activities — A Strategic Perspective for MSMEs
- Dhananjay Jadhav
- Oct 30, 2025
- 3 min read
The Changing Business Landscape
In today’s competitive environment, businesses—especially MSMEs and manufacturing enterprises—are expected to do more with less. Globalization, automation, and compliance complexity have changed how companies operate.Functions like accounting, costing, payroll, and taxation, once seen as core internal operations, are now increasingly being outsourced to professional firms.
This shift is not just about saving costs — it’s about unlocking strategic efficiency.
What Does Outsourcing Mean?
Outsourcing means engaging an external professional agency or firm to perform specific financial or operational activities on your behalf.Instead of maintaining an internal team for bookkeeping, cost accounting, or compliance, the company collaborates with a specialized Cost Accountant or Chartered Accountant firm to manage those functions through defined processes and service-level agreements (SLAs).
Why Companies Are Moving Toward Outsourcing
1. Focus on Core Business Operations
Entrepreneurs and management teams can focus on production, innovation, and customer service instead of being burdened by compliance deadlines and documentation. Finance becomes a support system rather than a bottleneck.
2. Access to Expertise at Lower Cost
Outsourced professionals bring deep domain expertise in:
Product costing and cost audit under Section 148 of the Companies Act
SAP CO, Material Ledger, and financial analytics
GST, Income Tax, and MOOWR/PSI/PLI documentation
This ensures that decisions are not just compliant but also data-driven.
3. Scalability and Flexibility
Whether it’s handling a seasonal increase in accounting volume or setting up a new plant, outsourcing allows instant scalability without recruiting or training new staff.
4. Technology and Automation Advantage
Professional outsourcing firms invest in modern tools such as:
ERP-integrated dashboards
Power BI and Excel-based MIS systems
Cloud accounting platforms
Document management systems
This enables real-time visibility into financial data for better control and faster decision-making.
5. Compliance and Risk Management
With constant regulatory changes — GST updates, cost audit filings (CRA-2, CRA-4), subsidy documentation, etc. — it’s risky for companies to rely only on internal staff.Outsourced partners ensure timely compliance and reduce exposure to penalties.
Which Activities Can Be Outsourced?
Category | Activities Commonly Outsourced |
Accounting | Bookkeeping, bank reconciliation, TDS & GST return filing, accounts finalization |
Costing | Cost records, product costing, variance analysis, cost audit support |
Payroll | Salary processing, PF/ESIC compliance, Form 16 generation |
Compliance & Subsidy | MOOWR documentation, PSI/PLI subsidy claims, ROC filings |
Reporting | MIS dashboards, financial projections, variance analysis |
What Should Not Be Outsourced
While outsourcing has clear advantages, companies must retain control over strategic financial decisions:
Business budgeting
Decisions of Pricing, profitability, and margin control
Strategic cost reduction decisions
Board-level financial analysis
These areas require management judgment and confidentiality and should remain in-house with leadership oversight.
The Hybrid Model – Best of Both Worlds
Modern organizations are adopting a hybrid model, dividing responsibilities intelligently:
Function | Who Should Handle |
Day-to-day accounting, costing, and compliance | Outsourced Partner |
Strategic decision-making and internal control | In-house Finance Head / CFO |
Audits, reviews, and advisory | Independent Consultant |
This ensures both control and efficiency, combining in-house oversight with external specialization.
Case Example – MSME in Nashik
A mid-sized engineering unit in Satpur Industrial Estate, Nashik, was facing challenges:
Frequent delay in GST filings
Lack of cost visibility by product line
High manpower turnover in the accounts department
After outsourcing to a professional firm, they achieved:
20% reduction in monthly overheads
Real-time MIS dashboards for management
Timely subsidy claim under PSI 2019 and MOOWR documentation compliance
Result: Better profitability and peace of mind.
Strategic Benefits Beyond Cost
Business Continuity – No dependency on a single accountant or employee.
Audit-Ready Documentation – Ensures records are systematically organized.
Decision Support – Outsourced partners provide cost insights, not just accounting data.
Networking Advantage – CMA firms often connect clients with government or industrial associations for incentives.
How to Start Outsourcing Effectively
Identify Routine, Repetitive Tasks suitable for outsourcing.
Engage a Certified Professional Firm with industry experience (CMA/CA).
Define Scope and KPIs clearly – timelines, deliverables, formats.
Start Small, Then Scale – Begin with one unit or function before expanding.
Maintain Monthly Reviews between management and the service partner.
The Future of Finance Is Collaborative
Outsourcing is no longer a cost-cutting exercise—it’s a strategic partnership.Forward-looking companies are integrating external experts for specialized work while retaining strategic control internally.The result is a leaner, faster, and more compliant organization.
Conclusion
For MSMEs and growing manufacturing companies, outsourcing accounting, costing, and compliance is not just an operational decision—it’s a strategic investment in efficiency, expertise, and scalability.
By collaborating with professional Cost Accountants, companies can focus on what truly matters: growth, profitability, and sustainable value creation.
Get in Touch
If your organization is exploring outsourcing for accounting, costing, or subsidy documentation, you can connect with:
CMA Dhananjay Jadhav, FCMA, MBA (WX), M.Com
Proprietor – DP Jadhav & Co., Cost Accountants
📞 +91 9623774684 / 9860804684 | ✉️ contact@dpjadhav.com🌐 www.dpjadhav.com
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