The World Is Flat

These midsize firms “are getting a more level playing field, which they were denied before,” said Jerry. “Suddenly they can get access to the same advantages of scale that the bigger guys always had.”

Is the message to Americans, “Mama, don't let your kids grow up to be accountants”? I asked.

Not really, said Rao. “What we have done is taken the grunt work. You know what is needed to prepare a tax return? Very little creative work. This is what will move overseas.”

“What will stay in America?” I asked.

“The accountant who wants to stay in business in America will be the one who focuses on designing creative complex strategies, like tax avoidance or tax sheltering, managing customer relationships,” he said. “He or she will say to his clients, 'I am getting the grunt work done efficiently far away. Now let's talk about how we manage your estate and what you are going to do about your kids. Do you want to leave some money in your trusts?' It means having the quality-time discussions with clients rather than running around like chickens with their heads cut off from February to April, and often filing for extensions into August, because they have not had the quality time with clients.”

Judging from an essay in the journal Accounting Today (June 7, 2004), this does, indeed, seem to be the future. L. Gary Boomer, a CPA and CEO of Boomer Consulting in Manhattan, Kansas, wrote, “This past [tax] season produced over 100,000 [outsourced] returns and has now expanded beyond individual returns to trusts, partnerships and corporations... The primary reason that the industry has been able to scale up as rapidly as it has over the past three years is due to the investment that these [foreign-based] companies have made in systems, processes and training.” There are about seventy thousand accounting grads in India each year, he added, many of whom go to work for local Indian firms starting at $100 a month. With the help of high-speed communications, stringent training, and standardized forms, these young Indians can fairly rapidly be converted into basic Western accountants at a fraction of the cost. Some of the Indian accounting firms even go about marketing themselves to American firms through teleconferencing and skip the travel. Concluded Boomer, “The accounting profession is currently in transformation. Those who get caught in the past and resist change will be forced deeper into commoditization. Those who can create value through leadership, relationships and creativity will transform the industry, as well as strengthen relationships with their existing clients.”

What you're telling me, I said to Rao, is that no matter what your profession-doctor, lawyer, architect, accountant-if you are an American, you better be good at the touchy-feely service stuff, because anything that can be digitized can be outsourced to either the smartest or the cheapest producer, or both. Rao answered, “Everyone has to focus on what exactly is their value-add.”

But what if I am just an average accountant? I went to a state university. I had a B+ average. Eventually I got my CPA. I work in a big accounting firm, doing a lot of standard work. I rarely meet with clients.

They keep me in the back. But it is a decent living and the firm is basically happy with me. What is going to happen to me in this system?

“It is a good question,” said Rao. “We must be honest about it. We are in the middle of a big technological change, and when you live in a society that is at the cutting edge of that change [like America], it is hard to predict. It's easy to predict for someone living in India. In ten years we are going to be doing a lot of the stuff that is being done in America today. We can predict our future. But we are behind you. You are defining the future. America is always on the edge of the next creative wave... So it is difficult to look into the eyes of that accountant and say this is what is going to be. We should not trivialize that. We must deal with it and talk about it honestly... Any activity where we can digitize and decompose the value chain, and move the work around, will get moved around. Some people will say, Yes, but you can't serve me a steak.' True, but I can take the reservation for your table sitting anywhere in the world, if the restaurant does not have an operator. We can say, Yes, Mr. Friedman, we can give you a table by the window.' In other words, there are parts of the whole dining-out experience that we can decompose and outsource. If you go back and read the basic economics textbooks, they will tell you: Goods are traded, but services are consumed and produced in the same place. And you cannot export a haircut. But we are coming close to exporting a haircut, the appointment part. What kind of haircut do you want? Which barber do you want? All those things can and will be done by a call center far away.”