The pandemic provided the impetus for growth

10/06/2021

Please tell us about major factors behind your group’s revenue growth over the past year.

Paradoxical as it may sound, the pandemic provided the impetus for growth. During the quarantine restrictions, our clients’ business did not stop, and we had to adapt all the time: stay in touch, ensure smooth documents circulation and timely reports submission. We had to learn to work in the new environment, to become more flexible and efficient – to change and grow.
During the lockdown, when in-house accountants worked remotely, many companies reconsidered their attitude towards outsourcing of accounting functions. Accounting, which is not at hand in the office, has become more familiar – this has prompted businesses to look towards a professional service provider. I am pleased that many of them have chosen us.

The second factor I would like to mention is the migration towards digital processes in Russia, which the government is actively supporting. For example, the electronic personnel records experiment launched by the Russian Ministry of Labour in 2020. Our Client Login software product transforms HR records into electronic form and allows us to organise a legally significant HR document flow. By moving away from paper, the process of interaction with the accounting outsourcing service provider becomes faster and more transparent.

In 2020, you spoke about the next round of automation development, the great potential for reducing contact processes, and the prospect of demand for business process efficiency assessment and optimisation. What is the situation with these areas now? Do you see any requests for services in this regard, and what does your company offer for these customer purposes?

Business has become much more pragmatic: customers are trying to understand how effectively their teams interact, which functions are more profitable for them to keep and where to use a service provider. This has generated a surge of interest in our business process efficiency assessment service.

We analyse the customer’s processes of interest, find the “weak links” and provide recommendations for improving processes and increase their efficiency. It should be noted that a significant increase in efficiency does not always require large investment. For example, while doing the project for an international manufacturer of construction and forestry machinery, we discovered that several employees were filling in technical documentation (standard forms) manually, rather than using the existing automated form generation function. The reason was trivial. The department had one printer which was used by all employees. Lines in the technical forms were slipping due to printer misconfiguration – i.e. accountable forms were spoiled. The solution was to buy a separate printer with hard settings for the staff responsible for the technical documentation forms. It cost the company about 20 thousand roubles and freed up 70% of several employees’ time.

What anti-crisis services did you offer customers in 2020 and still continue? What do they get from such services? Please give a brief example of a typical project.

In 2020, we saw a significant interest increase in “going digital”. This makes sense. With offline shops closed, the online remained the only way to sell. But this switch to selling online required significant changes from our customers – they had to restructure their business processes and adapt them to the e-commerce model. Many had to rework their IT infrastructure, for example, to integrate with popular marketplaces.
Our niche anti-crisis offer – a package of three services (accounting, legal and interim management services) – helped ensure business continuity and proved to be very popular with international clients. Despite the closed borders, when the CEOs could not get into Russia, the businesses continued to function: contracts with counterparties were concluded and legally significant documents with the state authorities were secured in an absolutely transparent manner and in full accordance with the clients’ needs.
In 2020, many clients who used to give us only part of their functions switched to comprehensive accounting support. Currently, we are seeing more interest in full outsourcing of accounting in the request structure. Integration between the project team and the client has grown more than ever. We have several major projects in which we are fully involved in the clients’ business processes, being part of the team. At the same time, we are more flexible than full-time employees; the client does not have to worry about our sicknesses, holidays, and various unforeseen situations, but we are always available, always in touch via all possible channels.

Which do you think the main drivers currently shaping demand for consultancy are, and what is of the highest demand in this regard? Does automation and digitalisation of business processes remain popular? Are there any new vectors for improving clients’ businesses? (Context: in general, until 2020, the most prominent vector was the pursuit of efficiency and optimisation). Has anything new emerged, considering the events of 2020? For example, business expansion opportunities due to bankruptcies and the demand for related services have increased).

In 2020, the trend towards universal digitalisation has only grown. What is perhaps new for the year is the interest of small and medium-sized businesses in digital tools. For smaller companies, improving efficiency with digital technologies is not just a matter of increasing profits, but often also of business survival. At the same time, customers have begun to realise that digitalisation is not just for big corporations.
Yes, often the digitalisation of key business-specific processes is indeed a large-scale and re-source-intensive process, but there is a whole set of operational processes that are almost standard across various industries. These include, for example, HR record management, accounting, and others. Their conversion into electronic, paperless form can be implemented using “out-of-the-box” solutions and does not require significant investments.
These ‘out-of-the-box’ solutions will bring people, processes, information and technology together to achieve greater operational efficiency, improve productivity, comply with regulations and legislation and, importantly, ensure business agility to change.

What is the reason of outsourced accounting functions demand over the past year? What were the most in-demand jobs, what are they related to, and what they finally give to the customer?

As I have already mentioned, we have increased the number of comprehensive accounting support projects. This is also due to the influence of the global trend towards the service model, when a company outsources some non-core operational processes to a professional provider. And to a large extent, of course, the pragmatism I mentioned earlier. An employee on staff is a fixed cost. You cannot cut accountants’ salaries or reduce mandatory deductions from them, even if your business volume is reduced. Moreover, in a situation of rapid growth, it can be difficult to scale a single employee into a full-fledged, efficient department.
Whereas a service provider gives you complete predictability, flexibility and manageability. You can vary the amount you spend on your service provider costs, depending on the size of your business. We have seen these fluctuations – fall and rise – many times with our clients during the pandemic. And as a partner, we have adapted by reducing or increasing the cost of services based on actual business volumes.

What difficulties, in your opinion, did foreign business in Russia experience during the pandemic, and did this affect the financial functions outsourcing? Did you observe a decrease in the number of requests from foreign businesses, and vice versa – was there an increase in the number of requests for services from Russian businesses?

I would say that foreign business in Russia is rather affected by the political situation than by the pandemic. Over the past few years, we have seen fewer and fewer new international companies in the Russian market. At the same time, foreign businesses already operating in Russia have become more active in outsourcing services. Until last year, we had a principle not to consider Russian companies as potential clients. We had always believed that our key difference in the field of accounting outsourcing was precisely the possibility to serve as a link between the company in Russia and the head office in Europe. But last year we had a turnaround for Russian business. This is largely due to the launch of our Client Login solution.
Client Login is a complete conversion of HR record management into electronic form. Depend-ing on a company’s area of activity, Russian labour law stipulates 40 to 60 types of HR docu-ments. This entire large-scale and standardized document flow can be converted into electronic form, and due to the current legislative changes, the need for “paper” document duplication is gradually being eliminated. The elimination of “paper” significantly reduces risks, speeds up in-formation processing and saves up to 40% of the HR record management costs.

In your opinion, what factors are currently slowing down the development of the accounting outsourcing segment? What, in your opinion, are the short-term prospects for the development of this professional services sector (until the end of 2021)? Is the development of this segment stimulated by the state?

On the whole, our market segment is quite stable, and I do not see any particular prerequisites for large-scale changes in the short term. As for the factors slowing down growth, not all companies are mentally ready to outsource accounting. Everyone, of course, has their own reasons for this. In my experience, outsourcing is definitely not suitable for companies which do not have well-structured business processes. When a company works with a service provider, it is a clearly regulated customer-provider relationship. If the customer’s business processes are not well defined and fixed, both will be dissatisfied.
I am quite positive about the market outlook: we are now seeing more and more penetration of electronic document management in various areas of activity. This is also stimulating the market for outsourcing accounting functions – it is becoming easier for both the provider and the customer. There is a constant whitewashing of the business: for many, the barriers to accounting outsourcing are being removed.
Can you see the impact of digital transformation on the consulting sphere and accounting outsourcing in particular? How is it shown?
In my view, the impact is undeniable. The system of interaction between the customer and the provider has completely changed. The document flow has changed. We have such clients whom we have never met in person, but this does not prevent our employees from being full-fledged members of their teams. Document processing services have long since moved into the commodity category, and there is enormous price competition in this segment. It is the consulting, the correct and efficient transactions processing that is becoming increasingly important.

Source: RAEX

Media contacts

Dimitri Kling
Senior PR & Information Analyst
+7 / 495 / 956 55 57

Newsletter sign up

subscribe

Subscribe to our newsletter to receive current news, our Industry Insight reports, invitations to our events, and more.