Huge potential in overseas accounting services space for Indian firms

With the world turning data-driven due to emergence of new age technologies, complex taxation issues and fast-changing investment scenarios, accounting professionals have a key role to play. Ramana Bodepudi, CEO, PreciStat IT Solutions Pvt Ltd, a Vizag-based KPO, BPO and software company, who recently formed a partnership with Walters & Sklyar LLP (WSCPA), a full-service advisory and accounting firm based out of California, said there is good scope for Indian players to serve foreign clients in tax returns preparation, accounting assistance and asset management. In an exclusive interview, Ramana told Bizz Buzz that the increase in international trade and investment, as a result of globalisation, has enhanced the need for a set of international accounting and reporting standards that will help to harmonise company financial information, improve the transparency of accounting, and ensure that investors receive more accurate and consistent reports.

As a result, accountants around the world have to adjust to the new standards. This implies continuously keeping abreast of currently accepted accounting standards and changing and adapting to new requirements when needed, as local financial reporting standards are being constantly altered to conform to standards such as the IFRS. "Another trend we have observed is the commoditization of certain services such as audit and this is following the same patterns as we had observed in the BPO segment in the past few decades," Ramana said.

What are the challenges the sector is facing during the Covid-19 pandemic?

The Covid crisis has adversely impacted almost all sectors globally, with disrupted supply chains, country-wide lockdowns and organisations exploring the possibility of long-term and even permanent remote working. Some key concerns faced by KPO organisations such as ours are data security and the impact on productivity due to either inadequate infrastructure at employees' homes or the lack of supervision.

Our biggest challenge has been to keep productivity and quality up while safeguarding the teams' health and safety. We have been vacillating between operations from the office to work from home with each scenario presenting its own unique set of pro's and con's.

Is the popular acceptance of digital platforms during the pandemic helping the companies involved in corporate planning and accounting to grow?

By now, most C-suite executives have led their companies to digitise at least some part of their business to protect employees and serve customers facing mobility restrictions as a result of the Covid-19 crisis. As one CEO of a large tech company recently stated, "we are witnessing what will surely be remembered as a historic deployment of remote work and digital access to services across every domain."

Indeed, recent data shows that we have vaulted five years forward in consumer and business digital adoption in a matter of around eight weeks. Banks have transitioned to remote sales and service teams and launched digital outreach to customers to make flexible payment arrangements for loans and mortgages. Grocery stores have shifted to online ordering and delivery as their primary business. Schools in many locales have pivoted to 100 per cent online learning and digital classrooms. Doctors have begun delivering telemedicine, aided by more flexible regulation. Manufacturers are actively developing plans for 'lights out' factories and supply chains. On our part we recently upgraded our queue elimination SaaS platform 'NoQ' to incorporate a video consultation mechanism enabling our clients consisting of doctors and patients to interact with each other online, eliminating the need for the patients to visit the clinic.

Being one of the first in undivided Andhra Pradesh and being the first in Visakhapatnam, can you please give details on how you started and metamorphosed PreciStat into such a big company?

It has been a steady progression of moving up the value chain over the past few decades, and has not occurred overnight. I started my career designing micro-processors such as the Pentium MMX at Intel and then switched gears to become a tech entrepreneur. My first company was a venture capital backed SaaS entity that was established in 1998 in San Francisco, which subsequently got acquired in 2000 by a New York-based firm. After that I started a contact center company and for the first time setup operations in India (Hyderabad) and over time this organisation grew to a few thousand employees across the globe and was acquired in the early part of 2019. I had cashed out of this company in 2005 to start PreciStat and that was around the time I chose to setup a delivery center in Vizag primarily to create employment opportunities in my hometown and also believing that the infrastructure and talent pool was commensurate enough (which was not the case when I was scouting for a location in 2000).

Who are your main clients in the overseas market? Do you also offer any value-added services for better property management?

We have been a leading provider of business optimisation services and SaaS platforms to mid-market enterprise clients in the US since 2005. The specific domains in the KPO sector that the company specialises in are bookkeeping, accounting and tax whereas, in the BPO segment the company offers video auditing (served world's largest food processing firms such as JBL, OSI, Cargill, McDonalds), contact center, property management, revenue cycle management for healthcare and virtual assistant services.

On the products front the company has deployed two market leading, cutting edge SaaS platforms, VDOintel an AI based video auditing and surveillance solution that is a market leader in the multi-family, construction, retail and manufacturing sectors in the US and NoQ, an innovative queue elimination (not management) that is significantly helping eliminate crowding at large public hospitals and physician's clinics across India. On the FinTech front PreciStat has also developed a payroll processing platform designed for the Middle East market and achieved market penetration in Oman with a few mid-market enterprises in its kitty.

What is the difference between Indian GAAP and US GAAP?

We have seen as a result of the historical links with British rule in India the foundations of corporate law and accounting, like most other legal and political foundations in India, have been influenced by the UK system. Indian GAAP primarily comprises 18 accounting standards (AS) issued by the Institute of Chartered Accountants of India (ICAI). To support interpretation, the ICAI has also issued guidance notes and 'expert opinions' on specific queries raised by companies and accountants. Of the three, however, only the standards are mandatory in the application. Additionally, in the financial statements the Indian Companies Act 1956 and various other industry-specific statutes prescribe certain minimum disclosures. However, the companies listed on the stock exchanges also need to comply with a few other accounting rules such as preparing cash flow statements and accounting for stock-based compensation.

The Indian GAAP reflects international GAAP in the key accounting principles such as: prudence, going concern, consistency, accruals, substance over form and materiality. While currently the most significant accounting differences are absence of consolidation and deferred tax accounting.

Although, there are other differences relating to disclosures such as: disclosure, segment reporting of related party transactions, and so on. However, with the introduction of new standards all these differences are most likely to disappear soon.

What led Indian companies to prepare accounts in compliance with international GAAP, especially US?

GAAP, was the temptation of foreign capital markets. Also, companies with intentions to raise money on the US public markets, or merely have their shares traded. Therefore, they need to prepare their accounts under US GAAP. However, the rules for a private placement in the US, do not require such a conversion.

Being a successful entrepreneur, what is your suggestion to aspiring accounting students?

Accountancy careers will never go out of style as long as money and business exist. In every business, daily journals, ledgers, bank reconciliation statements, profit and loss statements and income and balance sheets present an unbiased picture of the financial position of an organization. They tell the true position with regard to its liabilities, cash sources, viability of managerial and investor decisions and compliance with taxation and corporate laws. Thus, good accountants are a need everywhere.

There is tremendous potential for accounting professionals both domestically as well as internationally. So, I would recommend them to really focus on accounting fundamentals as that will hold them in good stead irrespective of the specialisation they chose to go into in the later part of their career.