Transaction Costs and Control of Outsourced Accounting: Case Evidence from Britain and India

Posted: 21 Sep 2006

See all articles by Brian Nicholson

Brian Nicholson

The University of Manchester - Manchester Business School Worldwide

Abstract

This paper adopts a transaction cost and management control theoretical framework to advance our understanding of offshore outsourcing of all or elements of the accounting function. Interviews with offshore vendors in India and their UK-based clients provide a number of case studies of the control of this relatively novel activity. We explore three offshore relationship types including fully owned and operated offshore facilities, vendors servicing former parent and third party outsourcing. The paper identifies transaction costs and potential control problems in several stages of outsourcing. This is followed by identification of practices and controls available in order to contain uncertainty and potential opportunism in the context of global outsourcing of various accounting activities.

Keywords: Offshore, Outsourcing, Transaction Cost Economics, Control, Accounting, Finance, India

JEL Classification: M40, M41, M47, G34, L22, L23

Suggested Citation

Nicholson, Brian, Transaction Costs and Control of Outsourced Accounting: Case Evidence from Britain and India. Management Accounting Research, Forthcoming, Available at SSRN: https://ssrn.com/abstract=931891

Brian Nicholson (Contact Author)

The University of Manchester - Manchester Business School Worldwide ( email )

United Kingdom

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