Twelve-hour shifts and seven-day work weeks exhausted accountants at Rucci, Bardaro & Barrett. But most painful for Chris Barrett was the "Easter parade" -- layoffs of seasonal workers and interns after April 15, the deadline for Americans' annual tax filing.
So Barrett, a partner in the Massachusetts firm, will send about 150 of his 600 clients' tax returns this year to India, where recent college graduates will prepare Americans' federal tax returns. Barrett won't hire -- or fire -- any extra employees, and the average turnaround time for completing returns is already 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 last year and only 1,000 in 2002.
Critics say outsourcing short-shrifts US accountants and exposes unwitting Americans to identity theft, which the Federal Trade Commission ranks as one of the country's fastest-growing crimes.
Last week, US Senator Dianne Feinstein urged major US 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," she wrote to chief executives of Citigroup, Bank of America, Ernst & Young, Equifax and TransUnion.
But executives argue they can't afford to ignore the trend.
The average accountant in India makes US$250 to US$300 per month, compared with US$3,000 to US$4,000 in the US. Many firms say they'll use the savings to undercut competitors or add premium services like 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, California-based SurePrep, a software and consulting service with 300 Indian accountants in Bombay and Ahmedabad.
In the late 1990s, the biggest US 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 US citizens living abroad, said Gary Boomer, a consultant for accounting firms.
But in the last year, they've migrated 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 US citizens living abroad, and about 1,000 for US residents, spokesman Ken Kerrigan said.
KPMG, which established an Indian subsidiary in 1993, has six offices providing tax and other consulting services for 2,000 companies in the subcontinent. Spokesman Greg Dvorken said KPMG executives "continue to explore" whether to use offshore accountants for preparation of US returns.
PricewaterhouseCoopers and H&R Block have no immediate outsourcing plans. But H&R's mortgage subsidiary, Option One Mortgage, is sending data entry work to India, and H&R is studying whether outsourcing has "other possible advantages," spokesman Bob Schneider said.
Critics say risks outweigh advantages.
Although firms have yet to report identity theft or fraud that stemmed from outsourcing, privacy advocates cringe at the notion of scanning and transmitting individual income forms -- along with the Social Security numbers and salary information on them -- across about 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.
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