How Much Does it Cost to Outsource Accounting Services? A Complete Guide

In today's fast-paced and unpredictable business landscape, outsourcing has become more than just a cost-cutting tactic—it's a strategic move. For accountancy practices in the UK, outsourcing accounting services is a game-changer, offering a faster route to scalability, efficiency, and service diversification. But perhaps the most frequently asked question remains: “How much does it cost to outsource accounting services?”

Whether you're a growing practice looking to expand your services or an established firm struggling with rising operational costs, this detailed guide breaks down the actual cost of outsourced accounting services, explores different engagement models, compares them with the real cost of in-house hiring, and helps you decide whether outsourcing is the right step forward.

Understanding the Cost of Outsourced Accounting Services

The cost of outsourced accounting services in the UK typically ranges from £1,500 to £3,000 per month per full-time equivalent (FTE). This pricing is influenced by several factors, including the experience level of the accountant, the complexity of tasks, and the engagement model you choose.

Outsourcing partners often provide customized pricing based on your practice’s specific needs. However, understanding common engagement models can give you clarity on pricing expectations.

Key Engagement Models That Determine Outsourcing Costs

Engagement models are frameworks that define how your firm collaborates with an outsourcing provider. These models determine cost, accountability, team structure, and workflow processes. Let’s explore the three most popular models.

1. Managed Full-Time Employee (MFTE) Model

The MFTE model is a popular choice among accountancy firms. Under this model, you get a dedicated accountant or team who works exclusively for your practice, reporting to a manager on the outsourcing provider’s side.

• Accountant/Senior Accountant: £1,500 to £2,000/month

• Manager-Level Resource: £2,500 to £3,000/month

This model is ideal for firms looking for consistency, ownership, and long-term planning. It works especially well when you want to replicate your in-house team structure with outsourced bookkeeping services.

2. Onshore Support Model

Some practices prefer a blend of offshore talent with onshore managerial support. In this hybrid model, while the accounting tasks are done offshore, an onshore contact is available for real-time communication, meetings, and quick escalations.

• Cost: Varies based on requirements

• Best For: Firms that prefer having a UK-based liaison without incurring full UK staff costs

3. Practice Outsourcing Model

This model offers a comprehensive solution, combining offshore accountants with complete technical, administrative, and client support. It provides scalability and technical expertise with a seamless workflow structure.

• Cost: Custom quotes based on workload and team size

• Best For: Mid-to-large firms seeking a robust and integrated outsourcing solution

True Cost of Hiring In-House Accountants: Hidden Expenses You May Be Ignoring

Hiring in-house may seem like a straightforward decision, but the real costs extend far beyond just monthly salaries. Here are six often-overlooked costs that make outsourcing accounting & bookkeeping services a smarter option.

1. Recruitment Costs

UK recruitment agencies typically charge between 20% to 30% of the hired accountant’s salary. For instance, hiring a senior accountant at £34,781/year could cost you an additional £7,000+ just in recruitment fees.

2. Training & Onboarding Costs

New hires require onboarding, training, and supervision before they become fully productive. This time could otherwise be used to grow your business or deliver value to your clients.

3. Office Space and Equipment

In-house staff means you’re paying for desks, computers, phones, furniture, internet, electricity, and more. These overheads can easily add up to £6,000 per employee annually.

4. Time Cost (Lost Productivity)

Between holidays, sick days, training, and non-billable meetings, your in-house accountant might only be productive for around 225 days a year, if not less.

5. Management & Supervision Costs

You’ll need to invest time in appraisals, performance reviews, and regular check-ins. These indirect time costs impact senior leaders and practice managers, who are pulled away from strategic initiatives.

6. Other Employer Liabilities

Including Employer National Insurance contributions (~£1,500/year), pension contributions, sick pay, holiday pay, and even the small perks like office snacks and insurance, these extra costs can become significant.

Outsourcing vs. In-House: Which is More Cost-Effective?

Cost Factor In-House Hiring Outsourced Accounting Services

Monthly Salary £2,800+ £1,500–£3,000

Recruitment Fee (One-time) £7,000 £0

Equipment & Office Costs £500/month £0

Sick Leaves & Holidays Employer absorbs cost. Covered by provider

NI & Pension Contributions Employer pays Included in service cost

Training & Supervision Required Provider handles training

As the table clearly shows, outsourcing accounting & bookkeeping services can cut your total cost by up to 50% without compromising on quality or reliability.

Why More UK Firms Are Choosing to Outsource

The accounting industry in the UK is facing several challenges:

• Talent shortages due to The Great Resignation

• Increasing compliance and regulatory pressures

• The after-effects of COVID-19 on workplace models

• A growing need for digital transformation

All these factors are driving firms to adopt outsourced accounting services as a long-term solution, not just a short-term fix.

Outsourcing doesn’t just save money—it creates capacity. You can use that freed-up time and budget to focus on:

• Acquiring new clients

• Adding value-added services like advisory

• Investing in growth initiatives

• Training your core staff

How to Choose the Right Outsourcing Partner

When evaluating potential partners for outsourcing accounting & bookkeeping services, consider the following criteria:

• Experience in the UK accounting market

• Expertise in UK GAAP, VAT, and HMRC compliance

• Scalable engagement models

• Data security certifications (ISO 27001, GDPR compliance)

• Client testimonials and case studies

• Onboarding and transition support

Top providers, like Profit By Accounting, offer free trials, allowing you to evaluate their service quality, communication, and turnaround times before committing.

Benefits of Outsourced Bookkeeping Services

While accounting often takes center stage, outsourced bookkeeping services offer immense benefits too. From reconciling transactions to preparing monthly financial statements, outsourcing your bookkeeping tasks helps:

• Reduce the risk of errors

• Ensure up-to-date financial data

• Improve reporting and analytics

• Free up your time to focus on higher-value work

Final Thoughts: Is Outsourcing Right for Your Practice?

If you’re struggling with:

• High overheads

• Limited bandwidth

• Recruitment challenges

• Pressure to grow or diversify

then outsourcing accounting & bookkeeping services may be the solution you need. It’s a scalable, cost-effective way to keep your practice agile, productive, and profitable.

At Profit By Accounting, we understand the unique needs of UK-based firms and provide tailored solutions through our proven engagement models. Whether you want to start small with a single accountant or outsource entire departments, our team is ready to support your growth journey.

Frequently Asked Questions

1. How much does it cost to outsource accounting services?

A. The average cost ranges from £1,500 to £3,000 per month, depending on the engagement model, resource experience, and scope of work.

2. What services can I outsource?

A. You can outsource everything from bookkeeping, year-end accounts, VAT returns, payroll, tax filings, and management accounts to more complex advisory services.

3. Are outsourced accounting services safe?

A. Yes, top providers follow strict data security protocols, including encryption, secure VPNs, and GDPR compliance, to protect your data.

4. Can I start with a short-term trial?

A. Absolutely! Most providers offer free or low-cost trials so you can experience their service quality before committing.

5. Will the outsourced team work in my time zone?

A. Yes, reputable outsourcing firms assign resources who can work in UK time zones and communicate regularly via phone, email, or project management tools.