The “test before you invest” model is an excellent fit for organizations who are looking for a low-risk, low-capital approach to establishing their satellite office in India.
The talent shortage in accounting is no longer a looming threat but a pressing reality, causing firms significant strain and demanding innovative solutions. According to the Bureau of Labor Statistics' current population survey, more than 300,000 accountants quit their jobs between 2019 and 2021, and fewer people are pursuing degrees in accounting and entering the field, leading to more open positions and for longer periods.
If you're struggling to recruit and retain top talent, you're not alone. And while you may be considering different recruiting approaches or even outsourcing work overseas, there is another option that can help you keep your work in-house: setting up a satellite office in India.
However, setting up a satellite office can be a daunting task, especially for a small or medium-sized accounting firm. It requires a significant investment of time and resources, and it's important to ensure that your office is legally compliant and that you have the right team in place.
That's where our "test before you invest" model comes in. We provide accounting firms with a limited but easily scalable way to test the waters in India before going all in. This way, you can minimize the risk and investment involved, and you can be sure that setting up a satellite office is the right move for your firm.
The test-before-you-invest model is a way to set up a smaller satellite office in India before going all in. It controls for some of the risks and limits the investment you’ll need to make upfront. This way, if the satellite office isn’t meeting the needs of your firm, it’s easy to quickly shut down before making too significant of an investment.
Additionally, the test-before-you-invest model can help you quickly learn what you need in a satellite office to be successful. You can learn from any mistakes at a smaller scale before growing a full team and a larger office.
This gradual approach minimizes risk and helps you shorten the learning curve when opening a satellite office.
Before we continue on with how to get started, it’s important to understand the key differences between a satellite office and outsourcing work.
A satellite office is an extension of your company; it is located in a different geographic region and operates as a fully functioning branch. Employees there are hired and trained by your organization the same way they would be at your headquarters. This gives you more control over who is on your team and how they work, which results in better quality.
Conversely, outsourcing involves hiring an external vendor to handle specific tasks, such as bookkeeping, content development, or customer service. The work may be one-time or ongoing, and you are assigned an account manager and resources, paying an hourly rate for each. You don't need to worry about attracting, training, managing, or retaining employees. When going the outsourcing route, it can be challenging to match the quality of services provided by your in-house team.
With so many options available for satellite office locations, you’re probably questioning why focus on satellite offices in India.
By choosing India, you will be in good company. All of the big four accounting firms operate satellite offices in India. Additionally, 80% of the top 30 firms have opened offices there.
And they’re continuing to expand. For example, In February of this year, PwC India and PwC US announced a new joint venture to hire 30,000 additional employees in India. They are scaling up their existing global centers and adding new ones. The firm hopes to accelerate its growth while improving service quality. With 50,000 employees in India already, this will bring the total workforce in the country to 80,000 by 2028.
Even outside of the accounting industry, many companies are embracing the idea of launching satellite offices in India. Based on our internal research, at least 40% of the Fortune 500 have satellite offices in India.
It is believed that this number will continue to rise. In a report published by Ernst and Young, they estimate that by 2030, there will be 2400 Global Capabilities Centers across India. They believe the number may go as high as 2500, as India is emerging as the world’s technology and services hub.
If the idea of testing a satellite office while minimizing your risks sounds appealing - here’s how you’ll get started.
The key to testing out a satellite office is to start with a small but flexible team. How small? Well, that depends on your end goal. We recommend 25% of your ideal team size. So, if you want to grow your satellite office team to 100 people, start with a 25-person team in your first year. This will allow you to:
As time goes on and you see indications that your testing is productive, you can slowly start to increase the size of your team, but you want to start small enough to limit your risk while allowing you to have enough people to be productive. This team will also help you to understand what is working and where you need to rethink your operations.
One of the most challenging (and frustrating) aspects of establishing a satellite office in India is probably registering your business entity.
This process is cumbersome, confusing, and can be costly. So, how can you avoid having to do this before you’re sure you’re ready to open a full satellite office in India? By using an employer of record (EOR), you can skip this step and save your time and money.
The EOR will allow you to set up your satellite office in days, as opposed to waiting months for all of the registration paperwork to be completed and approved. They will also take over all legal liabilities for you to be able to operate in India and ensure you are compliant with labor and other business-related laws.
Another good reason to use an EOR for this purpose is that you’ll have a vendor-client relationship with your EOR. Should you terminate your operations in India, you can also end your contract with your EOR. No complicated paperwork is needed to wind down the operation.
Conversely, if your office in India is thriving, you can easily expand your relationship with your EOR and have them help you continue expanding your team.
Coworking spaces, or shared office spaces where companies lease offices or desks, are a great way to gain access to cost-effective office space for the duration of your test.
Leases are generally much shorter than traditional commercial office leases, and the spaces are fully furnished and come with access to amenities like security and restricted access, power backup, internet access and other utilities, printers, housekeeping, and on-site cafes.
Coworking spaces are modern and well-maintained to entice companies to join and stick around. These offices also have common areas for networking and socializing so employees can connect with others and not feel isolated, even when working in a small team.
Depending on the size of your team for your test and their needs, coworking spaces will allow you to lease just a few desks or a larger private office space.
This allows you to reduce your capital investment, and if you want to terminate your test, you’re able to end your lease and leave. You won’t need to pack your things or sell off any furniture.
You can’t know everything you don’t know when trying something new. That’s where the support of an experienced consultant comes into play.
A good consultant is the most crucial aspect of succeeding in India. Your consultant should help develop your India entry strategy. This includes things like which city to go to, how to structure your team, as well as providing tailored advice to help you achieve your goals.
Having on-demand support means getting daily advice on everything from culture-related questions to more serious matters like how to prevent an issue from becoming a lawsuit. For example, your consultant might advise you on the right gift for a team member who is about to get married, the best laptops and headsets for you to purchase for your staff, and how to ensure you’re following all the local labor laws.
Other areas your consultant should help with include:
It may sound like a really long time, but to truly understand if your satellite office is a success, you want to run your test for two years.
The first year will be a year of big learning. In this time, you will see what is working for you and what isn’t, and any unanticipated challenges should arise and be worked through.
The second year is for really evaluating your success; you’ll refine your workflows and start to see the full potential of your satellite office.
By the end of your test period, you should have a vision of where you want your satellite office to go. You should have a good understanding of what is working well and what processes you might need to evolve. You may also have a better understanding of how you want to scale your team. How many more people do you want to recruit, and for what roles?
But, if you still feel as if you want to experiment more, there’s no reason to stop testing. The beauty of this model is that you can stay as long as you please in the ‘test’ phase and try different things to continue to optimize your office and team.
The primary consideration before taking on the test before you invest experiment is the cost. You will need to make an investment to ensure a viable test. These include:
It is imperative that you strike a balance and control costs by investing enough to test the model with a smaller team and ensure you have enough team members to cover all of the business functions you’ll need should you decide to scale up the office.
You want to be conservative in your investment and scale at a pace that feels comfortable to you. Your consultant can help you plan for this in a thoughtful manner and help you pivot should you need to make adjustments to your team throughout the test.
There are three main reasons why you’d want to leverage this model before going all in on a satellite office in India. They are:
Remember that you do not have to navigate this process in isolation. Numerous companies have already established a presence in India, and you can benefit from their experience. June15 Consulting has helped companies like yours who are looking to test before investing in India. Schedule a call today to explore how we can support your goals and streamline the launch of your satellite office.
Have a question about our services? Talk to us today to find out how an India office can help your organization.
