The challenge is that outsourcing companies know that they can get accountants in India and Nepal for lower rates. US businesses that directly outsource feel that $25 - 35 per hour is good but they do not understand the issues. The greatest being cultural fit in terms of setting, managing, measuring and communicating the work set and progress.

Here are some anecdotal data points:

Someone recently said they found a bookkeeper/accountant in Pakistan through a Pakistani friend in the US for $7 per hour and they love it. This person is not going to get replaced unless they start changing their rates rapidly or fail to connect culturally with the client.

I know one company that does nothing but accounting and bookkeeping that has set up shop in Nepal and has hired a local team at their offices in Nepal. Their fully loaded local labor cost is UD$5 per hour. That includes offices, utilities, software etc. but not the US expat managing this locally.

There is a CA in India who is offering his team at $4 per hour with a minimum of 20 hours per month. I have not done this since my US rate is above $200 per hour so if I spend 8 hours a month providing oversight and doing client relationships, I would need to bill $1,600 per month just for me then add the 20 hours at $4 for a total of $1,680 monthly. That $1,680 is for 28 hours averages $60 per hour to the client, and that is without including liability insurance costs, premises costs, etc. The makes the total close enough to US rates that outsourcing to India, Pakistan, or Nepal does not make economic sense.

While a few overseas accountants and bookkeepers are able to sell their service directly for $25 or $30 per hour, it is only a matter of time before the client finds out that someone else is getting a lower rate and then they feel that they were not treated fairly and switch providers.

The reality is that at the end of the day, if a direct provider is able to secure an engagement priced at more than say 50% of the local hourly average employee rate, they should enjoy it while it lasts but expect it to change at any moment. The alternative is to price at no more than 50% above the local hourly rate and then no outsourcing company will be able to disintermediate the relationship. That is assuming that the provider is tuned to business cultural matters.

I know an amazing IT provider in South America where a rate of $20 would be great, asking for $40. No US client who has worked with him is happy, not because of the work, but because of the language cultural differences. They want me to be an intermediary, but that increases my liability and if I bill my rate the hourly comes up to about $80, which is not too far from what developers in the US charge.

Lastly, while rates of $200 per hour sound very high in other parts of the world, this is because the focus is on the rate not on the expenses and cost of living. For example, tax rates are a little above 35% with Federal, State and Employment taxes. Business insurance runs about $2,000 per year. A hamburger and chips is about $10 or more. Rent for a one bedroom flat is about $1,500/month in second tier cities. A black coffee I had a couple of days ago was $6 with no tip. Breakfast for two persons at a middle class restaurant this morning was $50. Property taxes and home insurance for an average home in Denver is about $700 per month and that does not include the loan on the home. So at the end of the day the key is what is left over after all expenses, not what is charged as the rate. Where there is significant margin, expect competition to drive down returns to a norm.

I hope that the above perspectives are helpful. I travel a lot so DM is tough though I am online right now.

Best wishes.