Released on = November 24, 2006, 10:01 pm

Press Release Author = ValueNotes Outsourcing Practice

Industry = Accounting

Press Release Summary = ValueNotes Research estimates that in 2011, 1.6 million US
tax returns will be prepared from India, for $200 million, for a largely 4-month
activity.

Press Release Body = A report by Pune-based ValueNotes, estimates that as many as
360,000 US tax returns were prepared in India in 2006. It anticipates further
growth, estimating at least 1.6 million returns will be prepared here in 2011. The
estimates are conservative and the potential is much larger at 22 million returns
per year by 2011, but actual offshoring will be limited by CPA firms' inhibitions
about offshoring. However, competitive pressures could force many more firms to
offshore.

Says Glen Keenan, President of Xpitax, a facilitating outfit "The whole outsourcing
business requires quite a shift in thinking for the CPA firms, so comfort factor has
to be really high in order to do that"

The accounting and audit services are relatively new in offshoring and are gradually
gaining maturity with each passing tax season. Unlike other services, which are
traditionally outsourced due to cost pressures, the demand for Returns offshoring
stems from the lack of accountants and excessive workload during the "tax season".
The number of CPAs and other qualified accountants in the US are just not enough to
meet the increasing demand from increasing tax compliance, Sarbanes-Oxley related
work, estate planning, advisory etc. The demand-supply mismatch has led to severe
competition for experienced accountants and salaries are skyrocketing, even at
starting levels. CPA firms are discovering that offshored Returns are not only
turned around faster, but are also 40% to 60% cheaper. CPA firms after initial
success with Returns preparation is slowly sending more work offshore: bookkeeping,
financial statements analysis etc

Adds ValueNotes CEO, Arun Jethmalani, "The industry will quickly move beyond 1040s.
Both the vendors and buyers are at an inflection point on the maturity graph, and we
expect tax returns preparation will drive penetration into a wider range of
offshored professional accounting services."

The Indian offshore services provider landscape consists of captives of the Big Four
audit firms (KPMG, PriceWaterhouseCoopers, Deloitte and Touché and Ernst & Young),
American facilitating firms / agencies (Xpitax, SurePrep, CCH, IFR), Tier-1
multi-service BPOs (MphasiS, Datamatics, OPI), Tier-2 BPOs (PB Tech Impact
Solutions, Cosmic Internet Technologies) and F&A BPOs owned/ controlled by Indian
Chartered Accountants (GKM Management services, Business Accounting Services,
Accountant Anywhere, Enablizer)

Pratibha K, analyst at ValueNotes feels "Facilitators like Xpitax and SurePrep are
best positioned to service CPA firms, while Indian CA BPOs are well placed to
operate as complete back-offices for accounting firms"

Based on analysis that included extensive primary research, ValueNotes has picked
three winners from the current crop of vendors: Xpitax, GKM Management Services and
Business Accounting Services.

Karthikeyan, MD, GKM Management Services opines, "As Chartered Accountants, we feel
our biggest advantage is that we can speak the global language of accounting with
the CPAs. We feel this is a good differentiating factor for us compared to the large
corporate vendors. CPAs are bound to trust us more than the tech companies because
of our common accounting background."

The ValueNotes report titled "Offshoring Tax Return Preparation to India" suggests
that return preparation will set the stage for other accounting services to be sent
to India.

Web Site = http://www.valuenotes.biz/bpo/tax.asp

Contact Details = ValueNotes Database
301, Venus Point, 1226/1 Off F.C. Road, Pune - 411004, INDIA
Tel: +91 20 66010423/24
URL: www.valuenotes.biz
Contact person: Arpita Bedekar
Email: bporesearch@valuenotes.biz