Careers In Accountancy

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Careers in

Accountancy July 2008

Supported by

Inspiring confidence David Furst, President, ICAEW p.4

Passport to High Finance ICAEW p.6 Powers of Persuasion ICAEW p.7 Assurance Service for small enterprise ICAEW p.11 Small practice attractions Ajay Rajani p.12-13 Acquiring a qualification and the journey beyond Rakesh Dua p.16 Unravelling the non-dom conundrum David Kilshaw, KPMG p.20-21

ÂŁ1.50

Ruby McGregor-Smith, CEO MITIE - the only Asian female to run a FTSE 250 company (p.5 )

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A C OMPANY A SSET. Internationally recognised as the premier financial business qualification, the ACA gives your business the edge.

The ACA is the sign of the top trainees, employees and the sharpest business advice around.

The ACA inspires business confidence at every level. www.icaew.com/acaforbusiness

ICAEW-Asian Voice.indd 1

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Comment

Accountancy careers – on par with the best A world without accountants is unimaginable and accountants impact every aspect of our lives. We live in a fast paced, ever changing and increasingly complex business environment and the role of a qualified and trained accountant has never been more indispensable.

As David Furst, President, Institute of Chartered Accountants in England and Wales (ICAEW) has rightly pointed out, the confidence that accountants inspire is so vital to sound decision-making.

The UK offers excellent opportunities to acquire internationally recognised accountancy qualifications and train at some of the best accountancy practices.

Job opportunities too, are numerous; after all the UK is one of the biggest business destinations in Europe, the country boasts of a huge and organized public sector, the GDP growth rate is one of the highest in Europe and London is a world leader in financial services.

Accountancy jobs are some of the best paid in the country. A recent survey conducted by a leading financial recruitment services firm revealed that salaries at entry-level positions rose by 25% between 2006 and 2007 and added that a global shortage of trained professionals is likely to lead to a rise in remuneration.

The profession has evolved significantly in recent years, adding to the special status it already enjoys as one of the most attractive career options. Within the Asian community too, a career in accountancy is regarded highly, with women now joining the ranks; many in senior management roles. The objective of this magazine is to increase that interest by highlighting ongoing changes and providing unique insights and real life success stories. We could not have found a better partner to achieve this than the world leading professional accountancy body, ICAEW. Increasing globalization and the emergence of India as an economic super power has opened up several challenges and opportunities. Given the historic ties between UK and India and the numerous opportunities for bilateral trade and investment, accountancy firms in both countries are uniquely placed to leverage this spe-

cial relationship.

The contentious “Non-Dom” issue is of particular interest to our readers and this edition provides expert opinions of two leading accountancy firms.

Finally, I would like to thank the ICAEW for so vividly portraying the tremendous sense of fulfillment the profession provides and the challenges it offers.

The contents which the Institute provided to the last edition was much appreciated by readers and I am confident that it will make for inspiring reading once again.

The team at ABPL Group led by Cecil A Soans, has worked tirelessly to bring out another successful edition – well done!

CB Patel Editor / Publisher Asian Voice and Gujarat Samachar

Asian Voice & Gujarat Samachar - 2008

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Careers in

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Inspiring confidence When I qualified as a chartered accountant in 1973, I was delighted to find my salary doubled overnight to £2,400. Accountancy was changing: flared trousers and long hair were in, bowler hats and umbrellas were out.

More and more women were coming into the profession. And though globalisation was vaguely on the horizon, it was for big business not for you.

Other things remained the same. Discretion, integrity and respect for tradition were expected. As an articled clerk, you never argued with your firm’s partners. But the world was then much less litigious, and you were given responsibility at an early age. A generalist, in those days, I was offered a partnership two years after qualifying, aged just 24.

Today’s aspiring accountants are in a different league. Newly qualifieds’ expect on average around £50k in their first four years. Women now make up almost half of the profession. You have huge choice of career, moving easily between sectors. Employers positively expect you to challenge, and transition to allround business manager or leader. However, you’re unlikely to be offered a partnership early: you now have to specialise much more than we did.

Globalisation, of course, has also had a major effect: a high proportion of ACAs have some international experience, working in more than one country or on international projects and assignments. As global workers, competition for us is intensifying nationally and internationally.

Back to the future Things have changed hugely for individual accountants over the decades but many people are drawing parallels to the 70s. Because, while nobody back then would have thought the price of petrol could reach such unimagined heights (we paid 9p per litre), economically things are remarkably similar: a capital crunch, rising food prices, inflation and market volatility.

Then, regulators called for rebuilding confidence in the integrity of information which investors used to make decisions. They didn’t want gimmicks, public relations or innovative tax policies. How cyclical the markets and the lessons from history are.

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Inspiring confidence in information and in business – what chartered accountants have always done – is again a recognised necessity. The skills and qualities we bring are essential to good financial decision-making and planning. And as attitudes towards risk change and cash David Furst - President, ICAEW becomes king, integrity is as essential today as it was in the 70s. It’s encouraging to know that it doesn’t matter when or where you’ve qualified, your professionalism will always be valued.

ICAEW editor’s note ‘You’ll struggle to find something new to say every month’ people said to me as I became the institute’s first editor of Accountancy magazine (the official journal for our members). But I knew that wouldn’t happen given the institute’s extensive professional and public policy activities. I knew too that members would provide endless inspiration and Juliana Sancto insight.

Editor, Institute in Accountancy People are sometimes surprised to know that institute members work at the institute and how many volunteers we have.

Actually, how else would you underpin the necessary understanding to act on the profession’s behalf and work with government? It’s about credibility.

So for this edition, the second we’ve been delighted to sponsor, I thought we’d offer some insight on what the institute does. The faculties featured are centres of expertise which offer practical support on the business issues of today and tomorrow. The global market-leading qualification in corporate finance – the CF – and new assurance services are also examples of the institute’s forward thinking. And you don’t have to be a member to take advantage.

And members themselves? Well, women in the profession are really making their mark. You see the evidence from Ruby McGregor-Smith (that rarity, a female FTSE 250 CEO in the UK), and Vandana Poria whose career straddles continents, and the visionary Gaynor Coley, MD of the Eden Project. Enjoy.

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Straight to the top Ruby McGregor-Smith, CEO of outsourced business services group MITIE, is the only Asian female to run a FTSE 250 company. Winner of an Asian Women of Achievement Award 2008, she hopes one day such awards won’t be needed.

When I left university, I wanted to do a business qualification. After looking around, I settled on chartered accountancy, knowing it would give me opportunities beyond pure finance.

I grew up in an Asian family where my parents were keen on my sisters and I having careers, and being independent as adults. That was their focus and that kind of parental support was incredibly important.

I was born in Lucknow, India, in 1963, but moved to England when I was two. I grew up in North London with my two younger sisters, both of whom are also chartered accountants, and both qualified at Ernst & Young. My father is also a chartered accountant. And my husband and sister-in-law are too, but that’s coincidental.

As the CEO of MITIE, I don’t really have a typical day. Usually I wake up around 6.15am with my two children. If I have to go to Bristol, where the head office is, it’s an hour and a half drive from where I live in Surrey. I’ll spend the day in meetings, which might be looking into opportunities in mergers and acquisitions or results, as well as talking to my direct reports.

If I’m in London, it’ll take about an hour to get into the office on Baker Street. Twice a year I have the big City institutional visits, and I usually spend one to two days a month on City issues.

Committed to our clients The other thing I do with the whole management team is attend some client pitches. That’s an incredibly

Ruby McGregor-Smith

important part of our work. A lot of what we do is around bidding for new opportunities so we’re all very heavily involved in putting those together, and pitching to clients. It’s very much a part of our strategy that our senior people are involved and we believe it shows a serious level of commitment.

You have to be passionate about what you to do to enjoy it. And you should always try and surround yourself with passionate people. Many people feel threatened by other people so you find some teams where people don’t want to go out and find individuals that are better than them.

At MITIE, we’ve always strived to recruit the best people whom we think could be doing our jobs one day, because that’s what builds successful groups. That means you can give people responsibility. Certainly in our industry it makes a great difference to what you do every day.

A job I love Winning the award at the Asian Women of Achievement Awards 2008 was a great privilege. It was nice to be recognised for doing a job I love. That’s wonderful, as it was never something I thought I would get recognised for. If it can help other young Asian women realise they can do well at something they love, then I’m delighted to have been given it. I was a little bit overwhelmed but I accepted on MITIE’s behalf because without MITIE I would not have had these opportunities.

I think I underestimated the impact of what I’d achieved.

However, if it encourages people to want to do more or feel inspired, then that’s fantastic. I read somewhere that it was hoped that one day there would be no need for these awards because it would mean that achievements like mine wouldn’t have to be recognised anymore because it would be mainstream – and that struck a chord with me.

Training as an ACA opens the door to a huge range of career opportunities in the UK and internationally. To find out more, visit www.icaew.com/careers Asian Voice & Gujarat Samachar - 2008

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Passport to high finance The ICAEW offers more than pure accountancy. With students and sponsors from the UK via Canada to South East Asia, the institute’s Corporate Finance qualification is making notable waves.

When the ICAEW and the Canadian Institute of Chartered Accountants jointly launched the Corporate Finance qualification in 2005, they knew they had created a world first for corporate finance practitioners, whatever their background.

Nearly three years on, the CF designation has taken on an extraordinary life of its own. Its unique focus on the practicalities of deal-making – the technical, analytical and decision-making skills –has made it relevant industry-wide and internationally appealing.

The fact that you don’t have to be a chartered accountant or an accountancy student to take the qualification is also a very attractive selling point.

To date, some 400 students are either on the programme or have completed it. Over 1,000 corporate finance professionals in 50 countries worldwide have been awarded the CF designation and, in April this year, the Malaysian Securities Industry Development Corporation became the first CF programme provider outside of the UK and Canada.

An international qualification In addition to its entrée into the Malaysian market, the CF qualification is to be taken up more widely in the region over 2009 and 2010, so whether individuals study for the CF in London or Kuala Lumpur, their new skills will make them more eligible for roles across the international finance scene.

Eugene Wong, head of investment banking at an international Islamic bank in Malaysia, is a champion for the qualification and wants to promote it across the wider South East Asia market.

Having looked at the syllabus closely, he is keen

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to encourage people to take it up. 'I think the qualification is very helpful. The syllabus and delivery mechanism is strong and provides in a very systematic way both the hard and soft skills needed in corporate finance.'

The CF is drawing new students not only from the investment banks, but also from within corporate finance boutiques, private equity, consulting, law and industry, as well as accounting practices, a number of whom are championing the qualification with their new graduate intake.

The flexibility of the qualification has been fundamental in encouraging the London investment banking community. For instance, to make the CF even more accessible, a new training course has been specifically designed to cater for them. ‘Our training provider, BPP, has launched a new tailored programme, which will run over Saturdays,’ says James Paterson, who has managed the ICAEW’s CF qualification development team. ‘That’s made a huge difference.’

The Big Four Three of the Big Four firms in the UK have integrated the CF into their training programmes. According to Kourosh Mehrabani, training partner for Deloitte’s corporate finance advisory practice, 'We want our practitioners to hold the pre-eminent qualification for corporate finance practitioners'.

James Meadows, in Ernst & Young’s transaction advisory services, says: ‘We have introduced the CF as an add-on qualification to the chartered accountancy training and the numbers taking it are going up all the time. We have had excellent feedback from the students so far.’

The CF’s success is down to its practical nature.

It not only supports what people do every day, it also gives them a wider perspective of corporate finance and how it fits into the business world.

Did you know the ICAEW’s Corporate Finance Faculty is the leading group of corporate financiers in the world? It provides a centre of excellence on corporate finance practice and assists with professional development and networking opportunities. The faculty’s experts contribute to EU and UK consultations as well as making representations to regulatory bodies worldwide.

For more information, visit www.icaew.com/corpfinfac For more about the CF, visit www.cfqualification.com or contact the CF team on +44 (0)1908 248293, email cfqualification@icaew.com To register for the November intake in the UK, visit www.bppfinancialservices.com or contact BPP on +44 (0)20 7786 5999, email financialservices@bpp.com

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Powers of persuasion The ICAEW has a strong track record lobbying government and Revenue & Customs on behalf of businesses and the taxpayer. Tax expert Anita Monteith tells us how it is done.

The road to tax simplification is long, arduous and often frustrating. But arguing the case for a fairer, less opaque, tax system that protects the competitive position of the UK, is a key goal for Anita Monteith and other experts at the ICAEW’s Tax Faculty.

The Tax Faculty’s lobbying work started in earnest nearly 10 years ago when it published 10 Tenets for a Better Tax System in 1999. The idea was to provide government officials with a framework that, if adhered to, would result in logical, clear and fair tax law.

Costly errors Officials and ministers may come and go but there is always one constant – the willingness of politicians to make changes to the tax regime, either to swell the Treasury’s coffers, or else make the party in power seem fairer and more clear-sighted than preceding administrations. The trouble is that politicians and their advisers lack the expertise or a helicopter view of the UK’s tax system – a shortcoming that can lead to costly errors. ‘If government had taken these tenets on board, they wouldn’t have made some of the mistakes that they have made,’ Monteith says.

The kind of mistakes she is referring to include measures on income shifting, where the government proposed changes to the way husband and wife businesses were taxed in the light of what it perceived to be tax avoidance. The government published its views and proposals, the profession explained why they were virtually unworkable and the government deferred its plans – finally allowing time for proper consultation on the matter.

More recently, the government proposed simplifying the capital gains tax regime, cutting it to 18%.

Again, this was a measure that wasn’t debated and the resulting consternation led to yet another measure – the entrepreneurs’ relief – aimed at improving the picture but ultimately further confusing things.

Changing mindset That said, Monteith has detected an improvement over the last two to three years in the attitude of ministers and officials. ‘Recently, they have started coming to us in advance,’ she says. ‘Although we were rather shocked by the abolition of industrial buildings

allowances, we have seen far better consultation on some of the other capital allowances changes.

Although there are some problems remaining, the legislation is much more sensible and considered than it might have been.’

There are other signs that officialdom is starting to come around. The faculty now regularly meets Treasury officials, something that would have been unheard of four years ago. Within the Revenue, there are individuals who are also happy to confer with the institute, and the faculty has worked closely with Dave Hartnett, its director general and acting chairman.

There’s still plenty to do, however. Monteith is heavily involved in small business taxation issues – they suffer from an uneven playing field on the regulatory front, she argues. She also believes that the national insurance burden is huge and disproportionate for employers. With changes to company car taxation as well to the capital allowances regime for plant and machinery, there will be plenty to keep the faculty busy.

If only someone at government had taken a closer look at those tax tenets. ‘Consistency, that’s what’s best for business,’ she says.

Anita Monteith qualified with Pricewaterhouse Coopers but left practice to work in financial and tax training, lecturing and writing. Between 1993 and 2002 she ran her own businesses including, World of Training, a dotcom business. She joined the Tax Faculty four years ago, where she is a technical manager focusing on SME taxation issues. She continues to lecture throughout the UK.

The Tax Faculty The Tax Faculty is the focal point for taxation issues within the ICAEW, Anita Monteith making representations to government and other authorities and public pronouncements on major tax issues.

Subscription to the faculty is open to nonICAEW members who require practical help, regular updates and relevant comments on current tax issues.

For more information, visit www.icaew.com/taxfax Asian Voice & Gujarat Samachar - 2008

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New revolutionaries Chartered accountants are more than technicians. Can they use finance to inspire innovation and create new ways of thinking about business? Absolutely, says Eden Project MD Gaynor Coley.

‘If you can do all this by transforming an old clay pit – it’s inspiration not to take “no” for an answer.’

‘You’ve helped us find the confidence to challenge right through the organisation.’ When you hear comments like that or your organisation is held up as a model for optimism – nationally and internationally – you know you’re involved in something of long-term value.

People often talk about chartered accountants’ primary role in sustainability as centring on measurement or assurance. I say that’s far too limiting. From my experience at Eden, I know our skill set makes us much more than technicians. We are communicators and true innovators, inspiring others to new ways of thinking away from frameworks that too often provide single-track thinking or worse, the wrong answer.

Certainly the skills I learned from my ACA in the 1980s have proved relevant not just to traditional business models – they’ve helped me to create new ones.

As FD of Plymouth Polytechnic, for instance, I had to transform a financial framework and shift a local authority-dependent organisation to an enterprise culture. It worked: Plymouth became one of the most successful new universities in the UK.

Creating Eden So, in the late 1990s, when Ernst & Young approached me about a visionary project – Eden – I was drawn to its educational and social enterprise goals, using plants as an accessible and exciting medium to educate. The green lobby was viewed as slightly nutty in those days, but the more I read, the more I became convinced.

Taking on the Eden Project was like stepping from an oil tanker on to a small, fast-moving speedboat with little petrol. We had £3,000 in the bank and needed £64m. Millennium funding was there in principle but couldn’t be drawn down because there was no match funding.

The financing we put together saw public sector funds entered into a structured finance lease with the private sector, raising £130m in initial funding. Our charitable activities became filtered through a limited company, which worked for profits to be used in turn for environmental education. We became a social enterprise charity with a commercial income stream – which gave comfort to the private sector.

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The social enterprise structure of the project was itself revolutionary in the UK and we were the first company to get it approved by the Charity Commission.

Today, many others use the same model – the chef Jamie Oliver’s social enterprise, 15, for instance. It’s a sustainable approach which works. And all because we dared to think differently – innovatively – about finance and structures.

Gaynor Coley and Gordon brown at the Eden Project

A positive tool Chartered accountants as transformers of enterprise may seem a revolutionary idea. Yet the Eden Project certainly recognised the ACA as a badge of competence and confidence in building the visionary team.

It took all of my experience, skill and years of effort to help make Eden a viable and sustainable proposition. There’s no doubt that developing new business models for a low carbon future will require chartered accountants’ expertise.

Gaynor Coley is an ICAEW member and MD and deputy CEO of the Eden Project, which has attracted over 9m visitors to date and added over £800m to the Cornish economy. Visit www.edenproject.com for more details.

Skilling up on sustainability The ICAEW is developing a new sustainability e-learning programme, to be launched this autumn, to raise awareness of the business case for corporate responsibility. It will introduce CR, including its history and terminology, and how to identify and measure key performance indicators. A self-assessment learning tool, it will lead business people to formulating a sustainability action plan.

Visit www.icaew.com/corporateresponsibility and www.icaew.com/businesssustainability for more information.

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Passage back to India Working on Asian radio inspired Vandana Poria to become a chartered accountant. Now she gives trainee accountants a lift into business with affordable education in developing economies.

When it comes to the benefits of a professional qualification, Vandana Poria is a believer.

Her own qualification – the institute’s ACA – has taken her a long way. Poria has worked in accountancy firms in London and Romania. As CEO of the international arm of training group BPP, she established colleges in five Eastern European countries between Vandana Poria 1997 and 2004. And, in her latest venture, she has become a social entrepreneur, setting up a publishing company called Get Through Guides with her husband to provide accessible and affordable accountancy learning materials from their new base and home in Pune, India.

In the process she has become something of an ambassador for working internationally – she has just been awarded the OBE for her work in Pune chairing the British Business Group to encourage trade between India and the UK – and a strong advocate of accountancy as an entrée into business.

‘I’m a very strong believer in professional qualifications,’ she says. ‘There can only be so many Oxfords and Cambridges and good universities. The great thing about a professional qualification is that the only thing that stops you getting it is yourself. Anyone can do them.’

Sound training Poria chose accountancy while working for local radio in South London. The media sector was her first love, but when the Asian radio station started to struggle financially, Poria began to appreciate the value of sound business training.

An accountancy degree and traineeship at medium-sized firm HW Fisher followed. But, keen for a new

challenge, she moved to Ernst & Young in Romania, where she oversaw 20 junior accountants. ‘They had amazing brains but didn’t really understand what they were doing or why they were doing it.’

She realised these young accountants needed more training support. With a colleague, she approached BPP, and set up a BPP franchise in 1997.

After a year, the company’s management bought her out and asked Poria to lead a new international division.

By 2004, Poria and her team had set up training centres in Poland, the Czech Republic, Slovakia and Hungary, with off-site training in Turkey, the Middle East and North Africa, turning out confident and competent qualified accountants.

Better opportunities Poria, by this time married with one child and pregnant with another, was thinking about India. She and her husband wanted to bring up their young family there.

‘In 2005, I started thinking back to India – and to Asia in general and Africa – and I was thinking that it would be good if there were cheaper materials, because professional training was just too expensive.

Central Europe could afford it. Most of our clients were blue chip companies. But if you’re talking about Senegal or Gambia or Pakistan, they can’t afford it. We wanted to give students who were studying by themselves or just part-time at college better opportunities at an affordable price.’

Key to Get Through Guides’ ethos is support for people studying without the infrastructures that the West takes for granted. ‘We have a lot of students from Africa, the UK, from Pakistan and other parts of Asia.

We’re the only ones who offer a free forum online, so our students can communicate with us. We’re saying: “Just because you don’t have a tuition provider nearby, or even if you do, we’re here as a resource for you.” ’ She has no regrets about choosing India as her new home. ‘My biggest regret is I didn’t move sooner.

I just think the opportunities are phenomenal.’

An international qualification Students and organisations across the globe are realising the benefits of ACA training. With exam centres and tuition providers now in many countries, students no longer need to come to the UK to become an ACA. For more information, visit www.icaew.com/acaworldwide For details of the ICAEW’s international activities and support available to international members, visit www.icaew.com/international Asian Voice & Gujarat Samachar - 2008

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Renaissance man When global information giant Reuters was in trouble, chartered accountant David Grigson masterminded its financial rescue. It was an example of how the finance function can help shape and improve an organisation.

Between 2000 and 2003, Reuters’ share price nosedived from over £16 to just 95p, recognition that the company was in deep trouble.

What the share price collapse did not show was that plans for recovery were well underway. It would take four years for the transformation to take hold – but the financial rescue has been validated by the £8.7bn merger with Thomson Corporation, announced last year.

It was a ‘somewhat dysfunctional, structurally cumbersome and unnecessarily complex’ organisation that David Grigson joined as chief financial officer in 2000. Under Tom Glocer, the new chief executive who was to take over in 2001, Grigson was charged with masterminding a rescue.

Having now stepped down from Reuters following the merger, Grigson joined from another media company, Emap plc, where he was group FD.

Dysfunctional management Through the 1980s and early 1990s, Reuters had seen revenue pour in. But 2000 saw the bursting of the internet bubble and a sharp downturn in financial services.

‘We found a company that had grown very rapidly with no idea of where it was going or why,’ says Grigson.

‘We were competitively weak, our service record was appalling and management was dysfunctional.’

Reuters is a relatively small company that for 150 years had grown by flying its flag in new territories and telling people to get on with it. In 2000, it was still being run on this geographic model. Glocer wanted to overhaul its structure and restore control to head office, but with a dearth of financial management information, early attempts foundered. So initially, they set about cutting £450m – about 15% – in costs.

In February 2003, Reuters went public with ‘Fast Forward’, the second phase of its transformation, aiming for another £440m in cuts. ‘Nobody had an excuse for thinking we were not serious anymore,’ says Grigson.

The transformation began in finance. Previously, a large number of finance people worked out in the individual geographies. Grigson and his team brought transaction processes into regional shared service cen-

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tres and established a finance hub in India. All reporting lines for finance went through Grigson, financial support was strengthened and the flow of management information improved.

Reshaping the business Once streamlined, the finance function was able to help shape reorganisation elsewhere, oiling the wheels, keeping the scorecard.

David Grigson Carolyn Bresh, Grigson’s deputy at the time, believes that the role of finance during change is that of an enabler and gatekeeper. ‘Finance can never own the targets, but it has to help the business people deliver.’

By the end of 2005, Grigson and his team had taken out £900m of costs, but Reuters had not been investing. The company launched a third initiative, ‘Core Plus’, with twin objectives of £150m savings and taking advantage of growth opportunities.

‘For the first time ever we felt comfortable that, when we were investing money in new products, someone, somewhere, was keeping an eye on the profitability of that product over its lifespan and that therefore we’d know whether we had successes or failures on our hands.’

Taking out £1bn-plus in costs is an achievement but could only really be regarded as successful if Reuters met its Core Plus growth target, set at the anticipated market rate plus 3%, by 2008.

‘We feel very comfortable that we’ve achieved it,’ Grigson says.

To find out how Grigson's plans were implemented, listen to Carolyn Bresh, formerly group financial controller of Reuters, at www.icaew.com/thereutersstory These interviews are taken from the ICAEW Finance and Management Faculty’s special report Managing Change. The report is aimed at accountants working in business who may be involved in a change programme.

The faculty helps those working in business by exploring the latest ideas, trends and emerging business issues. Visit www.icaew.com/fmfac

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Safety in numbers More small enterprises are exempt from audit and owner-managers are looking for a credible means to road test their accounts. Chartered accountants are plugging that gap and bringing comfort.

and the US for decades. The guidance now developed in the UK incorporates latest international thinking and is a new initiative in Europe. ‘In terms of membership organisations, we are first out of the box with an offering of this nature,’ says Gerald Russell, vice president of the institute and a former chairman of its Audit and Assurance Faculty.

On the international stage, there is increasing focus on the assurance needs of smaller companies: in Europe, where audit exemption levels are being raised, and internationally - particularly in developing economies - where means of enhancing the credibility of small companies’ financial information are explored.

Independent opinion

Business conditions for small companies are seldom steady and sometimes measures intended to cut red tape can also limit transparency and insight into how those businesses are performing.

The institute has developed a new Assurance Service, unveiled in 2006, which is designed to fill the gap between accounts compilation and a voluntary statutory audit. Its goal was to provide a level of comfort on accounts to companies that are not required to have a statutory audit, but still want independent checking by a qualified accountant.

Quality concerns UK government figures show that the proportion of unaudited accounts filed at Companies House has grown dramatically recently – up 50% over the past five years. The fact that over 1.1m companies file auditexempt accounts potentially raises concerns about the quality of those accounts. Now, the government has increased the exemption threshold further to £6.5m for financial years starting on or after 6 April 2008, creating another 6,000 audit exempt companies.

Michelle Fisher, one of six partners at Sobell Rhodes Chartered Accountants in Pinner, helped to develop the Assurance Service after a client asked for some form of assurance – something not as demanding as an audit but nevertheless able to provide comfort on its accounts. ‘The Assurance Service offers to bridge the gap between the compilation report, which provides zero assurance, and a full audit,’ Fisher says.

‘It’s a cost effective alternative for companies that might want some credibility, some assurance on their accounts, without going to the expense of a full audit.’

A similar type of assurance has existed in Canada

Jo Iwasaki, from the Audit and Assurance Faculty, has been speaking to various stakeholders including practitioners, banks and credit management specialists as part of the institute’s consultation exercise on assurance.

The response so far from banks and credit reference agencies is in line with what was anticipated, she says. ‘They have their own systems for assessing companies, but an independent opinion from a professional accountant provides additional comfort.’

This is confirmed by Andrew Share, a director at Coface, a provider of credit management services. He would ideally like companies’ accounts to be audited, but if they take up their audit exemption rights, he would be comforted by knowing the accounts had been vetted by means of the Assurance Service.

‘It would provide some assurance that a business is conscious enough of its reputation to want to sign up for some assessment,’ he says. ‘We may look at it more favourably than some business that wasn’t so concerned.’

There are no statistics available on the number of companies already opting for the service. However, in Sobell Rhodes’ experience, companies with external shareholders and businesses that are growing fast are among those taking it up. Fisher is doing her bit to spread awareness of the service. ‘I include it almost as a matter of principle in business presentations to our target market,’ she says. ‘I think we are stealing a march on less proactive firms.’

For further information about the ICAEW assurance services, visit www.icaew.com/assuranceservice or contact Jo Iwasaki on +44 (0)20 7920 8786 or jo.iwasaki@icaew.com For information and resources aimed at small and medium-sized enterprises, visit www.icaew.com/enterprise Asian Voice & Gujarat Samachar - 2008

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Small Practice Attractions Ajay Rajani

There is a wide range of career opportunities available to the prospective accountant and choosing the right one can be difficult. In this article I'll be talking about my experiences in a smaller practice.

I hope to explain some of the attractions and, for those of you who decide to pursue this career path, provide some criteria that may help you select a firm. But let me start by telling you a little bit about myself.

With an interest in business and a father who was, by profession, a Chartered Accountant and tax specialist, it was perhaps natural that I should also pursue a career in accountancy. In 1991 I graduated from the University of Manchester with an honours degree, principally in accounting and finance. There followed a difficult year of job applications, interviews and rejections but, whilst in casual employment, I began to study for an accountancy qualification. It was shortly thereafter that I was presented with my first opportunity in a small public practice. The experience was invaluable because it gave me a sound foundation in double-entry bookkeeping and some initial exposure to tax and audit work. Crucially, however, I discovered how much I enjoyed accountancy and that this was the career for me.

A year later I moved to a local practice, which is where I have remained for the past twelve years. The proprietor of the practice gained his experience with one of the big four accountancy practices and, whilst there, saw a niche in the market for a firm that was able to offer high quality advice to small, owner-managed businesses.

The client base is diverse and includes hotels, IT businesses, farms, manufacturers, professional service firms, and charities. The practice employs ten fee earners segregated into an audit and accounts team, a tax team, and a payroll / bookkeeping team.

Following a brief spell in the tax department getting to grips with rudimentary taxation, I moved into the audit and accounts team. Whilst there, I completed my professional exams and became a member of the Association of Chartered Certified Accountants. After several years as a junior, semi-senior and senior, I am

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Ajay Rajani

now a manager with responsibility for a portfolio of clients and with a particular specialism in auditing.

Most of our clients are too small to employ an inhouse accountant, but they will usually have a bookkeeper; we prepare their accounts from the records they maintain. Many clients use accounting software and therefore much of the routine accounts preparation work has disappeared. Whilst preparing the accounts, we attempt to gain a broad understanding of the business and its method of operation, and seek explanations for notable variances in income, expenditure and the balance sheet.

Auditing is my particular interest. There is no statutory requirement for most small companies to have an audit and therefore those companies that do require an audit often have a degree of complexity. In essence, an auditor is required to form an independent opinion on whether the accounts present a true and fair view of the company's affairs. Auditors are uniquely privileged in their statutory right to make such enquiries as they consider necessary. As part of the process, the auditor will seek to obtain a thorough understanding of the business and its systems and procedures, consequently gaining a wealth of business insight. A good auditor must be curious, able to evaluate critically the information being presented, and able to design tests that efficiently and effectively provide the necessary audit evidence.

Wherever possible, we seek to add value in the accounts preparation and audit process. All staff are

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Accountancy encouraged to make commercial observations about the business, to comment on our clients' systems and procedures, to recommend tax planning measures, and to comment on tax compliance matters.

Accounts preparation and auditing occupies approximately two thirds of my time. The remainder is spent dealing with tax compliance and an enormous variety of ad hoc client assignments. Much of my time is spent analysing information and writing letters or reports, (being able to communicate clearly is therefore an important skill).

My small practice experience has proved to be hugely enjoyable and rewarding. It is something to seriously consider if : you would like to gain broad experience and good, all round training. you enjoy working in an environment full of fresh challenges - within a small firm, no assignment is likely to last longer than a few weeks. It is seldom boring! you relish developing long term partnerships with clients, where your services yield tangible results. you believe you would thrive in a meritocracy where initiative and ability are duly rewarded (In smaller firms, capable individuals soon draw the attention of partners). you would like to work within your local community, with a consequent reduction in your daily commute, and the opportunity to have a better work / life balance. If you decide to work in a smaller practice then, to obtain the best possible training, you should identify firms that have a genuine commitment to quality and excellence. Here are some questions you may want to consider when looking at a prospective firm:

Does the firm make use of external consultants to provide technical support and expertise, and does it use independent consultants to review and monitor the quality of its output and procedures?

Does the firm have a serious commitment to training at every level?

A firm which makes use of consultants in this manner has an obvious commitment to quality.

A firm's most valuable resource is the skills of its people. You would hope that a firm would fund the cost of your courses and provide you with time off to prepare for your exams. Also, make sure that the firm is registered as a training practice with the professional body you wish to join. Most smaller firms are too small to have their own training department, but many, like mine, belong to a training consortium which organises continuing professional development for its members.

Do you think you would enjoy working with the individuals in the firm?

What is the firm's average fee for an accounts preparation / audit assignment?

The client base may limit the breadth of experience available in some smaller firms. Firms with very small clients may not be able to offer the variety of experience you may be seeking. The average fee can be an indication of the size of a firm's clients and the complexity of their affairs.

How many audit clients does the firm have

and would the firm be able to offer you audit experience?

Relatively recent increases in the audit threshold has meant that some smaller firms may not have many, or any, audits.

Does the firm have any specialist departments?

Some smaller firms may have specialist departments which may, a little later in your training, present an opportunity to gain more in depth experience in a particular field. Most commonly, many smaller firms have a distinct tax department. The existence of specialist departments, particularly in taxation, can be an indication that the firm's client base has some complexity.

What use does the firm make of specialist software?

Again, if the firm's client base has complexity, then it has probably made a significant investment in software to help with the production of statutory accounts, tailor audit programs, check accounts disclosures, prepare tax returns, provide ready access to reference material, etc.

Try to meet as many individuals in the firm as possible since the relationships you have with your colleagues will either considerably enhance, or detract, from your enjoyment of the work.

If you are struggling to find your first job in accountancy, then do persevere. As in any field, experience counts, and so you may want to consider what may seem like a less than perfect job, initially. If nothing else, you'll discover whether accountancy is the profession for you. You may also want to consider making a start with studying for your professional exams, since it would help demonstrate your commitment to a prospective employer.

So, is a career in a smaller practice right for you?

I hope this article has given you a taste of what it has to offer. If you do decide to pursue this option, then choosing the right firm is important and I hope that some of my comments will assist you with this. Finally, all the very best with your chosen career!

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Multi-national organisations need finance professionals trained with a global perspective With multi-national organisations outsourcing parts of their business to increase bottom line savings or buy in specialist skills from all over the world, it is worth looking at what this means for the finance profession as a whole.

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Business Process Outsourcing (BPO) is a growing phenomenon that is having a major impact on the finance function worldwide. Even five years ago, companies underestimated the impact of globalisation and in particular the impact of technology and cheaper telecommunications on business. Today globalisation affects everyone.

Global competition to drive shareholder value by improving margins, organisational control and risk management is leading companies to view BPO less as an opportunity for cost reduction and more as an opportunity for complete business transformation.

Nowadays, practices such as outsourcing, off-shoring, business partnering and a variety of innovative collaborative relationships are stretching and blurring the traditional boundaries of organisations. Companies can now plug into the skill-sets most able to deliver the best results, whether it’s technology, expertise or infrastructure, and whether they are based in India, China or Europe.

These new processes have also made globetrotting easier for finance professionals. Those who have a professional qualification with a global reach, such as members of the Chartered Institute of Management Accountants (CIMA), have an international passport to work.

The CIMA qualification is designed to be relevant anywhere in the world. It’s the only international, professional qualification with a syllabus that has a sole focus on the education and training of management accountants in business.

CIMA has developed the BPO debate by taking a look at the growing trend for leading firms to move beyond finance-based outsourcing towards the more sophisticated role of Knowledge Process Outsourcing (KPO).

Companies that use BPO effectively, whether as a client or provider, can gain competitive advantage. This is where the benefits of KPO come into play. KPO can free up management time to be better utilised to drive share-

holder value – the true role of the chartered management accountant. CIMA members are now being given their wings to play a key role in the decision making process from strategy formulation and implementation right through to impact.

Globalisation drives the need for consistent skill, application and quality across different countries. In outsourcing arrangements, the retained function is freed up to focus on driving the business and creating value by contributing to the decision-making process, while the outsourcer is progressively being asked to provide more value creation skills within the service delivery team. Both of these are creating more need for CIMA skills.

Given the shortage of CIMA qualified people in many parts of the world, opportunities for CIMA members and students have never been stronger. CIMA students from all over the world are studying exactly the same syllabus and taking exactly the same exams, which makes the qualification truly global.

The CIMA qualification is very flexible and the entry level Certificate in Business Accounting is used by many organisations around the world as a common entry point for new finance employees before they move on to the professional components of the training.

CIMA also revises its syllabus every four years following comprehensive consultation and research with employers world-wide. This ensures that the syllabus reflects the current needs of the global business economy. All of its content is international in scope and the structure has been carefully considered to reflect the importance of examinations and practical experience.

Membership of CIMA is also a career-long commitment to high professional standards and adherence to an international code of ethics - two increasingly important factors in world markets.

Overall, CIMA students and members are in a better situation than ever before to become the business leaders of the future.

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Sujata Gaikwad, CIMA Student Project Accountant, National Grid National Grid is an international and one of the largest investor-owned energy companies in the world, delivering gas and electricity to millions across Great Britain and north-eastern US. It owns the high-voltage electricity transmission network in England and Wales and operates the system across Great Britain. It also owns and operates the high pressure gas transmission system in Britain and its distribution business delivers gas to 11 million homes and businesses.

‘Globally, CIMA has a really good reputation and the syllabus is well-rounded with a strong business focus.’

‘Most of the people I work with are from non-financial backgrounds, so it’s important that I can translate the information I have into a form that everyone understands.’

For someone who had no idea what career she wanted to pursue after university, Sujata Gaikwad has certainly landed on her feet. The maths and physics graduate took her love of numbers and, after a few experiments, ended up with a hot job as a trainee management accountant at National Grid. ‘I didn’t know anything about accountancy at school,’ she recalls. ‘It just seemed a very dull job spent in front of a computer. When it comes to management accountancy, I couldn’t have been more wrong.’

Today Sujata is half way through her CIMA qualification, and project accountant for National Grid’s new 600million joint venture with Tennet, to construct a 260km electricity interconnector between the UK and Holland.

Despite the heavy workload, Sujata is powering through the CIMA syllabus. ‘The company is very keen for its employees to develop their skills and they have been really supportive with my CIMA studies,’ she says.

‘It’s been quite intensive working and studying at the same time. I also have CIMA classes at weekends and then have to run home and sort out my domestic life,’ she adds. ‘You have to be driven to fit everything in but

it’s all worthwhile.’

National Grid actively encourages its finance employees to study for the CIMA qualification.

Sujata is certain that it’s the right qualification for her.

‘Globally, CIMA has a really good reputation and the syllabus is well-rounded with a strong business focus,’ she says. ‘I tried out a few roles before I joined National Grid and I Sujata Gaikwad knew I didn’t want to go into audit or practice. I wanted to get into business and to make a difference. So all the signs pointed to CIMA.’ Her training in financial management and analysis has helped her interpret financial data for her nonfinancial colleagues. ‘Most of the people I work with are from non-financial backgrounds,’ she explains. ‘So it’s important that I can translate the information I have into a form that everyone understands.’

Sujata is currently responsible for setting up the financial management of the project from scratch and her training was really put to the test. ‘My studies have been really useful in every aspect of accounting for the joint venture,’ she continues. ‘It has covered everything from putting the right systems in place at the start, to consolidating the financial statements of each company, to accounting for the hedging implication and ensuring that the governance and ethical issues are included into the equation.’

Although the project is only a few months old, Sujata is confident that the project will meet its financial targets. She has now been given the role of mentor to a graduate CIMA trainee. ‘It’s been a good experience for both of us,’ she says. ‘The role has given me some management experience and I hope I have been able to give my mentee some useful insights into different processes.’

Sujata is so busy with her present role that she hardly has time to look ahead. ‘It’s a great company,’ she says. ‘If you work hard and are capable, you are definitely given opportunities to move up.’ Does she see herself at National Grid in five years’ time? ‘I don’t think I will need to go anywhere else,’ she laughs.

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Is my qualification the ultimate goal or is it part of a more rewarding journey?

Accountancy is a well regarded profession. Yes…it’s had its “ups and downs” and share of media stories from scandal to “do bean counters see daylight”!

However the truth is that it is an excellent vocation and qualification. A number of high profile CEO’s in global companies are qualified accountants. So by undertaking hard work and obtaining the qualification you set the scene.

That is just the “start of the journey”. It is my view that this is the start of a rewarding career….rewarding in both financial and non-financial terms.

Along your journey you need to follow some golden rules:1. Sharpen your “soft skills”.

2. Take on responsibility and do not be scared to take on parts of the job that fall outside finance…this will widen your knowledge base.

3. Learn foreign languages (my regret!!).

4. Manage staff…sorry…. learn to be part of a team.

5. Enhance your technology skills.

6. If you can get some work abroad, then take it again to expand your knowledge.

7. Have a good work/life balance. People should find you interesting, with good general knowl edge and want to engage with you.

The above rules can be applied whether you are in practice or industry.

Never underestimate the impact technology is having on your career…actually …on all our careers. The way we work, how we can work, from where we work and how others can share our work. This has been the biggest challenge for my practice and staff. How to embrace technology in everything we do. To find affordable solutions, allocate an increasing amount of our budget to IT and training…then retrain and then start again with new enhanced software. Well, there is some truth to that motto “you never stop learning”!!

Some people follow up their professional qualification with an MBA. I have had my staff do this and find that they approach things in a different way, are very focused and have a good idea of latest management techniques. They are better team players and can grasp the non-financial elements very well. The only consideration is the cost, time commitment and ener-

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Rakesh Dua, Senior Partner Dua & Co. Chartered Accountants

As well as being a Chartered Accountant, Rakesh runs two Business Networking groups and has a number of business interests including ones based in India. He was the Finalist in Lloyds TSB Jewel Awards 2008 (Professional Excellence Category) and was featured as a future leader in the Asian Power 100.

gy…but we know as Accountants; we invest now to receive future dividends.

Join other credible organizations to benefit from Networking. Knowledge base and Different approach.

For example, the Institute of Directors, a well regarded body with great networking opportunities and excellent support structure.

Accountants as they rise up the corporate ladder should never forget they are more visible. Therefore it is wise to do an image audit. You can do this yourself or go to experts. You can consider how you dress, people’s perception of you and so forth. However, I believe that the true reward of success is when you have a professional career, a balanced work/life schedule and can “put something back into society”. This contribution can come in any ways and some of these are listed below (not by any means any exhaustive list): Charities Voluntary advisory groups Community and religious based societies Sabbatical Mentoring Mentoring should not be ignored. There will be many points in your career when you need a good mentor.

Also imagine the pleasure you will have mentoring someone who may for example be where you were a few years ago…..the art of success is “giving”.

Along my journey I have been able to flourish in practice, work closely on fast track start-ups have a variety of work and met some interesting clients/contacts over the last 18 years. However working with school children, helping communities and recently taking a higher profile role in public life….means my career has only started the real journey of personal satisfaction and having the ability to really make a difference in all aspects of my professional and personal life.

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India's burgeoning economy Opportunities for UK based small and medium accountancy firms S.Jagadeesan, Minister Economic, High Commission of India in London

India is the largest democracy in the world. The far reaching and sweeping economic reforms undertaken since 1991 have unleashed the enormous growth potential of the economy. There has been a rapid, yet calibrated, move towards deregulation and liberalization, which has resulted in India becoming a highly favoured destination for foreign direct investment. The mood is upbeat and the signals strong. India has emerged as one of the most vibrant and dynamic of the developing economics and offers enormous opportunities for trade and investment partnerships.

What India Offers India is world’s fastest growing free-market democracy. It clocked real GDP growth of over 8.5% during last five years and averaged 6.6% growth over last 15 years since economic reforms began. India is a trillion dollar economy in absolute terms and the world’s fourth largest economy in purchasing power parity terms. Per capita income has nearly doubled since the turn of the century to over $800, and is expected to grow to US$ 2000 by 2016 and US$ 4000 by 2025, propelling India into middle income category. Exports and imports have grown at 2530% year on year.

Industry and services have been the major drivers of growth, growing at nearly 11% and 9% respectively in 2007-08. Manufacturing has, in particular, shown impressive resurgence and could be the next big revolution. India is already recognized as the outsourcing capital of the world, accounting for two-thirds of the global off-shoring pie. A qualitative shift in the services sector is underway as Indian companies move up the value chain from simple business process outsourcing operations to sophisticated knowledge process outsourcing, R&D and intellectual property creation. Growth has been broadbased covering not just newer areas such as IT & IT

Enabled Services, Biotechnology and Telecom but also traditional sectors such as steel (where India is set to become the second largest producer by 2015), civil aviation, food and beverages etc. Indian economy has undergone a structural transformation.

Share of agriculture in GDP has declined from 30% in S.Jagadeesan 1992-93 to 18.5% in 200607. Share of industry has remained relatively stable at a little over 26%; services sector has been a net gainer.

As India has liberalized, its integration with the global economy has increased. Over 38% of its GDP today comes from the external sector. However, the primary driver of growth continues to be domestic consumption and investment. Domestic savings and capital formation are an impressive 34% and 36% of GDP respectively, up from 22-24 % in 1991. A middle class population of over 300 million growing by 20-30 million annually makes India among the fastest growing markets for products and services. Hence the impact of the global economic slowdown on India has been limited and real GDP is expected to continue to grow at over 8% per annum over the next five years.

India has emerged as the investment destination of choice for those looking for profitable opportunities in short, medium and long term. Second generation economic reforms combined with India’s inherent advantages: political will and stability, sound macroeconomic indicators, conducive legal and institutional framework, young workforce, cost-effective English speaking skilled manpower, world class scientific talent pool and a huge and ever-growing consumer class, have all contributed to giving investors a return on capital that is higher than China’s. India ranks second in AT Kearney’s FDI confidence index and first in their Global Retail Development Index.

Moreover, India’s post-reform growth has been generally inclusive. The percentage of people below the poverty line has declined from 36% in 1993-94 to 28% in 2004-05. Employment opportunities have increased with nearly 50 million additional jobs being created in last 5 years.

India's Investment Policy The reform process has deregulated the economy and stimulated domestic and foreign investments, taking Asian Voice & Gujarat Samachar - 2008

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Accountancy India firmly into the forefront of investment destinations.

The Government, keen to promote investment in the country, has radically simplified and rationalised policies, procedures and regulatory aspects. Foreign investment is welcome in almost all sectors, except those of strategic concern (for instance, defence and atomic energy). A series of incentives has been announced to promote investments. These include import of capital goods at concessional customs duty (subject to fulfilment of certain export obligations), liberalization of external commercial borrowing norms, tax holiday and concessional tax treatment for certain sectors. In addition, several State Governments offer incentives such as subsidy on fixed capital, loans at concessional rates of interest and attractive power rates, while several incentives are project specific. A number of firms have been successful in negotiating favourable investment terms with the State Government concerned. Since the initiation of the economic liberalization process in 1991, sectors such as automobiles, chemicals, food processing, oil & natural gas, petrochemicals, power, services and telecommunications have attracted considerable investments. Today, in the changing investment climate, India offers exciting business opportunities in virtually every sector of the economy. Liberalization of the economy continues apace, with trade barriers largely removed and the peak tariff down from 350% in 1991 to average tariff of 15% in 2008. Privatisation programmes are gradually reducing the still-significant role of the public sector in the production and consumption of goods.

As part of the economic reforms programme, policy and procedures governing foreign investment and technology transfer have been significantly simplified and streamlined. Today, foreign investment is freely allowed in all sectors including the services sector except in cases where there are sectoral ceilings. All items/activities except the following are under the automatic route for foreign direct investment (FDI): ( i)

All proposals that require an industrial Licence.

An industrial Licence is mandatory if: a. the item involved requires on industrial licence under the Industries (Development & Regulation) Act, 1951 or b. the foreign equity portion is more than 24% of the equity capital of units manufacturing items reserved for small scale industries; or c. the item concerned requires on industrial Licence in terms of the locational policy (ii) All proposals in which the foreign collaborator has a previous venture or tie-up in India (excluding IT Sector). (iii) All proposals relating to the acquisition of shares in an existing Indian company in favour of a foreign investor. (iv) All proposals outside the notified sectoral caps, or under sectors in which FDI is not per mitted.

Investment in public sector units as also in Export Oriented Units (EOUs), and units in Export Processing

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Zones (EPZs), Special Economic Zones (SEZs), Software Technology Parks (STPs) and Electronics Hardware Technology Parks (EHTPs) also qualify for the Automatic Route. FDI in the insurance sector upto 26%, is allowed under the automatic route subject to licence from the insurance regulatory & development authority for undertaking insurance activities. In addition to Automatic Approval for new companies, such approval can also be granted for existing companies proposing to induct foreign equity. For existing companies with an expansion programme, the additional requirements are that:(i) the increase in equity level must result from the expansion of the equity base of the exist ing company. (ii) the money to be remitted should be in foreign currency, and (iii) the proposed expansion programme should be predominantly in the sector(s) under automat ic route.

For existing companies without an expansion programme, the additional requirements for eligibility for automatic approval are : (i) they should be engaged predominantly in industries under the automatic route. (ii) the increase in equity level must be from expansion of the equity base, and (iii) the foreign equity must come in foreign cur rency.

Otherwise, the proposal would need Government approval through the Foreign Investment Promotion Board (FIPB). Investors coming through the Automatic Route are required to file relevant documents with the Reserve Bank of India within 30 days after the issue of shares to foreign investors. Proposals which do not fulfil the conditions for automatic approval will require the approval of the Government. The investors have to make an application to the Foreign Investment Promotion Board, Ministry of Commerce & Industry for obtaining such approval.

Business opportunities for UK Enterprises The UK has strong ties with India, and UK companies are well positioned to take advantage of this growing export and investment market. The sectors in which proactive UK companies can increase their profitability and international competitiveness include Aerospace (civil), Automotive, Agribusiness, Biotechnology and pharmaceuticals, Construction, Creative and media, Education, skills and leisure, Engineering, Environment, Financial and legal services, Healthcare and medical, ICT, Oil and gas, Power, Transport and Water.

As India develops, it needs huge investment in physical and social infrastructure. In the sectors of Power, Roads, Ports, Airports, Telecommunications and Urban Infrastructure alone, an investment of approximately US$ 550 billion is required over the next five years to support a GDP growth rate of 8-9%. An important chunk of this investment will need to come from overseas. This is an area which offers special opportunities for British entrepreneurs who have vast experience in implementation of

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Indian energy sector, especially oil and gas, continues to be attractive for British companies. There is also need to collaborate in transfer of cleaner technologies at accessible costs.

UK can also be an important partner for India in improving and expanding social infrastructure, especially in the field of education and vocational skills. India has 350 universities but according to the National Knowledge Commission, needs 1500. It produces 415,000 engineers per year but this is nowhere close to the required number. The budgetary allocation for education is being raised fivefold during the 11th Plan period (2007-2012) to 8% of GDP to enable the country to reap its scientific and demographic dividend. The enrolment in higher education, which is currently 10%, will be raised to 20% during this period.

Vocational education is being expanded to cover 20,000 schools with a capacity of 2.5 million by 2011-12.

Government has also initiated a programme of upgradation of Industrial Training Institutes with industry participation, where British companies could participate.

India and the UK are among world’s great knowledge economies. There is enormous scope to collaborate in the field of technology entrepreneurship. More than 2,100 Indo-British joint ventures involving technical collaboration have been formed since 1993. The UK-India Education Research Initiative commissioned to improve educational and research links between both countries could be used to build mutually beneficial partnerships in science and technology entrepreneurship and initiate collaboration between business schools.

There are opportunities for expanding bilateral trade in newer areas such as biotechnology, healthcare, speciality tourism, food processing and creative industries. As India liberalises its financial services sector including banking and insurance, UK companies stand to benefit.

Opportunities for Indian Enterprises in the UK There are, in turn, equally numerous reasons for Indian entrepreneurs to do business in the UK. The UK is an easy place to set up and run a business: The World Bank found that it takes 13 days to set up a business in UK, compared to the European average of 32 days. It ranks the UK first in Europe and sixth in the world to operate a business. (Source: World Bank). The UK has an open, transparent and business-friendly system to encourage the formation of new businesses.

There are more than 2.6 million registered companies in the UK with over 350,000 new registrations each year.

No permission is required to establish a business presence in the UK, although there are regulations on the use of business names and certain business sectors which may require licenses or authorisation.

Low tax rate environment for foreign investors: The top corporate rate is 28 per cent below most of the UK’s core competitors. The UK has reduced its corporate tax rate from over 50% in the early 1980s down to one of

the lowest in the industrialised world. The UK’s highest personal tax band, at 40 per cent, is one of the lowest in the EU. (Source: Forbes Tax Misery Index) Flexible labour market: The World Bank ranks the UK the second best place in Europe to employ workers, just behind Denmark. (Source World Bank) Few barriers to entrepreneurship: The OECD noted that the UK is second in the world for Product Market Regulation, behind Australia. It has the least barriers to entrepreneurship in the world and has the third least barriers to trade and investment in the world. (Source: OECD) Leader in innovation: The UK is one of the most productive places for innovation firms in the world, ranking second only to the USA for the quality of its research base.

Stable political environment: According to Transparency International, the UK is one of the most transparent (least corrupt) countries in the world. It has a higher rating than France, Germany, USA and Japan.

Thriving economy: The UK has one of the highest GDP growth rates in Europe, well above the European and Euro zone averages. (Source: OECD) Commitment to improving the planning regime. The recent Energy White Paper by the Department of Business, Enterprise and Regulatory Reform (BERR), and the Government-commissioned Barker 2 Review of Landuse Planning and Economic Development, outline speedier planning consents for businesses.

Speaking in the international language of business: Operating in English gives firms in the UK a natural advantage when communicating globally.

Progressive communications network: The UK has the most extensive broadband market among the G7 countries and one of the strongest ICT infrastructures in the world.

Home to Europe’s number one city for business: London is the world's leading financial services centre on a number of key performance indicators and was voted top European city for business for the 17th year running in 2006 by the European Cities Monitor.

Talent pool: According to the Times Higher Education Supplement (THES), the UK has the top six universities in Europe and two of the top three globally.

(Source: The Times) Springboard to Europe: The UK is the number one gateway to Europe giving easy access to the 27 member states of the European Union, the world's largest single market.

Number one location for European headquarters: More overseas companies set up their European headquarters in the UK than anywhere else.

Olympic opportunities: London will host the Olympic Games in 2012. Procurement started in 2007. Contracts are available for firms of all sizes and the total budget runs into billions.

Thus there are limitless opportunities for economic and commercial co-operation between India and the UK, which Indian and British companies can and should take advantage of.

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Have recent tax pronouncements, made the UK an unattractive location for overseas nationals?

There is no doubt that recent tax pronouncements around the issue of “non-doms” did a fair amount of PR damage to the UK’s reputation as an attractive location for overseas nationals. Headlines such as “Will the last non-dom to leave the UK please turn out the lights” were common place early this year, albeit slightly sensational. Nevertheless, there was a real fear that the proposed changes to the non-domiciled rules would drive a significant proportion of the nondomiciled population from the UK. So six months after the Chancellor made his announcement and after more re-writes than a script from blockbuster movie, the “new rules” for individuals not domiciled in the United Kingdom are in their final form.

David Kilshaw, Head of Private Client at KPMG in the UK reviews the position and assesses what it means for taxpayers.

For over 90 years, individuals living in the UK but not domiciled here (because their permanent home was overseas) had not paid tax on their overseas profits until they brought them to the UK. This is in contrast to individuals who are both living and domiciled in the UK as they pay tax in the UK on their worldwide profits. HMRC were proposing fundamental changes to the non-domiciled regime and onerous disclosure requirements.

Initially there was a real concern that many nondomiciled individuals would leave the UK, leaving a negative impact on the economy. However, the early signs indicate that non-domiciled individuals are comfortable with the new rules. Stability is now essential and further changes could still cause tax payers to vote with their feet.

As was to be expected from such far reaching proposals there was much lobbying against them, and in the event the proposed changes have been watered down considerably. The UK remains attractive to non-

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domiciled individuals because even under the new rules, they can live in the UK but not pay tax on their overseas profits.

The overseas income is only taxed if brought to the UK and can be spent offshore tax free. This is called the “remittance basis”. However, there are now some additional stings in the tail of this regime.

David Kilshaw The new rules apply if you are resident in the UK but domiciled elsewhere. This may be because you were born overseas and have come to the UK temporarily or because you were born here but your father was born elsewhere. Such individuals are commonly called “nondoms”. Individuals who are in the UK for less than 3 years, and ordinarily reside overseas can also benefit.

A major change that has been announced is that non-doms now have to decide each tax year if they want to claim the remittance basis or if they would prefer to pay tax on their worldwide income as it arises.

Moreover, once they have lived in the UK for 7 out of 9 years, they must pay HMRC an extra £30,000 to use the remittance basis. The £30,000 is in effect a new tax on non-doms. It is in effect the membership fee, paid on an annual basis, to a very exclusive club. This must now also be taken into consideration when choosing whether to be taxed in the UK on all your income and gains, regardless of where they arise, and therefore not paying the £30,000.

Another consideration that needs to be addressed is that if you elect for the remittance basis you lose your personal allowances and your tax free CGT allowance. As previously mentioned, depending on how long you have been resident in the UK you may have to pay the extra £30,000 as well. This means for many it will be a straight forward economic decision.

The attached decision tree illustrates how to approach the question.

Tax payers must also remember that it is only a

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tax deferral – you still pay tax when and if you bring the monies to the United Kingdom. You may have paid £30,000 to join the club, but drinks are still extra!

There is a de-minimis limit that may override these considerations. You don’t need to make a claim (and therefore pay the £30,000 if applicable) if you are a “non-dom” and your overseas profits are less than £2,000 in the year. It is to be hoped HMRC will increase this limit over time. As you are not making the claim for the remittance basis your personal allowances are left in tact in this case.

In any but the most straightforward case, and due to the complexity and the increase in the record keeping requirement of the new rules, non-domiciled individuals will probably want to consult with an accountant when making their decision. Moreover, they will need to “nominate” (i.e. select) the monies they will use to pay the £30,000 and tell HMRC. There are lots of potential traps here. If you nominate the wrong funds you could actually increase your tax bill. The spectre exists of a taxpayer remitting £1 from the wrong pocket and suddenly paying tax on monies which would otherwise be taxed at a lower rate.

In addition to consulting more frequently with their accountant, non-doms will also need to keep in close contact with their banker as they may need a lot of new bank accounts to ensure they are being as tax efficient as possible. HMRC have new rules whereby they can make it very expensive if you mix all your offshore monies (e.g. income and capital gains) into a single bank account.

The new rules have also made it increasingly difficult for non-domiciled individuals to bring funds to the UK without losing a large slice to the Treasury. Many

of the old ways of bringing money to the UK tax free have been closed. You can no longer make tax free gifts to your spouse or minor children. However, if you make a gift to your adult children overseas, your son or daughter can bring the money to the UK tax free. But make sure they don’t use it for your benefit – HMRC have given themselves power to then tax you!

Other new rules relating to remittances to the UK include those that are treated as “deemed remittances”. Broadly, under the old rules, you could buy an asset with overseas profits and bring it into the UK without incurring a tax bill. The tax man would have only become interested if the asset was then sold.

However, the new rules mean that tax will be incurred when the asset is simply brought into the UK. Exemptions have been introduced to these rules enabling you to bring personal effects, like clothes, shoes and small items (under £1,000) in the UK without tax consequence.

Offshore trusts remain very useful to non-doms and, for example, can avoid capital gains tax on assets located in the UK. If you had a trust before 6 April 2008, you can elect to re-value its assets to that date tax free. That is almost certainly something you will want to do.

Although the “rules” have only just been finalised, the new regime started on 6 April 2008 and so nondomiciled individuals need to think about their position as soon as possible.

So, there are lots of changes. Some of the new rules remain obscure, and certainly in the early years of the new regime tax payers and their advisers will have to be extra vigilant. A “non-dom” status remains a very valuable title, but it is no longer one easily used!

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Protecting your Wealth At a seminar hosted recently by top 15 accountancy firm, HW Chartered Accountants, London Director, Yogan A. Patel, presented on topical issues relating to the protection of personal wealth, including the new rules for non-UK domiciled individuals and the recently announced 2008 Budget.

Mr Patel was joined at the event by guest speaker David Weatherhead, Director of Global Transaction Services at RBS, who outlined their involvement in trading with the Asian sub-continent.

Yogan Patel, Director, HW Chartered Accountants “There has been a lot of press coverage in recent months with regard to wealthy, high profile, non-UK domiciled individuals who have been saving thousands of pounds in tax thanks to the beneficial UK tax structure and some clever financial planning. It is estimated that there are over fifty billionaires in the UK, with a combined fortune of nearly £130 billion but under previous tax laws this enormous wealth only contributed £14 million in tax to the UK economy.

In April 2008 changes were announced by the

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Chancellor that will impact, potentially quite heavily, on the non-dom community in the UK. But perhaps before I delve into the intricacies of the rules it’s best to consider what is actually meant by non-domicile and how it differs from non-residency, with which it is often confused.

Non-domicle - as a general rule, one’s domicile follows that of your father (generally as to where he was born) and this is known as domicile of origin.

However, from a tax perspective, a deemed domicile can arise, for example in the UK, because of time spent in the country or through personal choice.

Non-residency - you are considered to be UK tax resident if you are in the UK for at least 183 days during a tax year or you have been present in the UK for, on average, more than 90 days per tax year in the preceding 4 years. To be present in the UK, an individual must be here at midnight. So one could fly into the UK on Monday morning and depart on Thursday evening and will be deemed to have spent 3 days here.

In the 2008 Budget, Alastair Darling announced changes that mark a fundamental shift in the way nondomiciled UK residents will be treated. Previously, a resident non-UK domiciled individual did not have to pay any UK tax on their overseas income unless that income was brought into the UK. It was also still possible to avoid this tax by, for example, gifting income to family members who then brought the funds into the UK or by attributing the funds to capital rather than capital gains. Under the new rules, which are expected to become law in July 2008, non-domiciled individuals who have been resident in the UK for 7 out of the last 10 years will have to make a choice. They can either subject their worldwide income and capital gains to UK tax or pay a flat £30,000 charge and any additional tax due on overseas income or gains brought into the UK. The provision in the budget which gives taxpayers the option to choose to pay tax on their overseas income or capital gains or accept the £30,000 charge can be reviewed on an annual basis, giving individuals the flexibility to decide which is more suitable depending on the level of overseas income and gains earned each year.

However, all is not lost, there are ways to remit funds and there is some flexibility within the rules that can help you protect your wealth. For example, through clever use of trusts, estate planning and taking breaks from the UK, it is possible to avoid the significant tax liabilities that these new rules impose on nondomiciled individuals. Of course, the key to getting it right is having a good accountant on your team!

This change in the treatment of non-domiciled individuals is a significant shift for UK tax legislation.

Previously, the International Monetary Fund has suggested that Britain was effectively a tax haven like the

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Accountancy Cayman Islands, because of its relaxed rules for the super-rich. However, talk in the financial community is that we could be facing a mass emigration of highly-talented, supremely wealthy business people with the introduction of the strict new rules.

If these changes affect you or you are not sure of your current status, it is vitally important to seek professional advice to find out how your personal and business assets could be affected and what you can do to protect your wealth both now and in the future”.

David Weatherhead, Director of Global Transaction Services, RBS “India provides a wealth of opportunities for UK businesses looking to trade internationally. It is the UK’s 18th largest export market globally and the second largest export market in the developing world after China. Major exports include non-metallic minerals, gold, telecom equipment, transport equipment and industrial machinery. In the last few years UK exports to India have significantly increased and two way trade of goods and services between India and the UK has doubled since 1993. Imports to the UK include textiles, clothes, jewellery, organic chemicals and fruit and vegetables.

Business and in particular investment between the two countries has also risen over the last few years and continues to do so. Indian investments into the UK increased by 110% in 2005/06 and a total of 76 investment projects from India creating 1500 jobs were recorded. And in return the UK is the 5th largest inward investor in India (not taking into account re-investment

of UK companies already operating in India).

At The Royal Bank of Scotland (RBS) we are seeing more and more UK companies striking up trade relationships with India in various different sectors and of varying sizes. Our international specialists have enormous experience in international trade, payments and cash management and can provide customers with the needed financial backing. Their key focus is to supply customers with tailored financial solutions to suit their exact funding and cash management requirements.

Each customer is assigned a locally based relationship manager who works as a business partner, providing advice and support in what can sometimes be a daunting market especially for those new to trading globally.

Among the products and services that RBS offers to companies looking to make the most of trading overseas are two products; RBS TradeFlow and Global Liquidity. Accessible using a standard web browser on any PC desktop worldwide, TradeFlow is an International Trade and Supply Chain Management service. It streamlines communications and document exchanges with trading partners and also provides access to value added services, including links to third party service providers. A key benefit of TradeFlow is a facility that allows buyers and suppliers to create, exchange and manage purchase-to-pay trade documents electronically over the Internet and enables the automatic grouping of purchase order data to seamlessly create Letter of Credit instructions, thereby speeding up the process and reducing discrepancies often experienced with paper-based systems. Trading internationally can be a time consuming and complicated business and in increasingly competitive markets any business that can speed up and simplify the trade process gains a distinct advantage. RBS TradeFlow has been designed to offer an end-to-end solution that delivers a “win-win” proposition to help enhance customers’ business relationships.

On the cash management side, we often suggest Global Liquidity as the best solution depending on the customer’s exact needs. Global Liquidity is a cash management tool that is also internet-based. It is a fully automated, cash concentration service that RBS offers to companies needing to manage their global cash pooling more effectively. It allows customers to view balances and transaction details of accounts across the globe through one system and automatic transfers, either on a regular or ad hoc basis, can be set up so that cash is moved to wherever it is required. By using the system, companies can make the most of credit balances and they can maintain complete control and visibility of transactions.

Both TradeFlow and Global Liquidity are protected using the latest technology and are fully accessible from anywhere in the world. As globalisation increases, our products and services have to reflect this and need to give users full accessibility no matter where they are.

We use a phrase in Global Transaction Services, “freedom to trade” and that is the key driver behind the services we offer”.

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Not all firms of chartered accountants is the same Located in the heart of London's West End Servicing clients throughout the country A professional firm dedicated to helping business grow

We provide practical experience and supervision at all stages in a supportive and dynamic environment, enabling you to fully develop your professional abilities.

Come and grow with us by finding out more about our training programmes.

Partners: Joseph H L Weston, Melvin C Kay, Kiran D Patel, Jill L Springbett, Paul E Rayner

To find out more about us and how we can work with you, contact Kiran D Patel ACA at: 73/75 Mortimer Street LONDON W1W 7SQ Tel: 020 7636 7493 Fax: 020 7636 8424 Email: k.patel@westonkay.com Website: www.westonkay.com

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Companies act 2006 and the auditor Shila Shah, Jaycee Comservices Limited

Some of the provisions of the Companies Act 2008 came into force from 6 April ‘08, directly affecting financial reporting and auditing.

applies to one year’s audit and must be approved by the company’s shareholders. The agreed limit must be a ‘fair and reasonable’ one for the auditor’s liability. In another change to the existing position, a company will no longer be able to purchase insurance for its auditor.

Senior statutory auditor

Although the basic rules of accounting records, accounting reference dates and forms and contents of accounts remain substantially unaltered, there are some significant changes of which all practitioners should be aware. Some of the key changes are outlined below.

Where a company’s auditor is a firm (rather than an individual) there is a new requirement that the auditor’s report must be signed by the firm’s ‘senior statutory auditor’ in his or her own name, for and behalf of the audit firm. This person must be an individual who has been identified by the relevant firm as being the senior statutory auditor and who must be a qualified auditor.

The senior statutory auditor will not be subject to any additional civil liability by signing the audit report in his or her name.

Accounts filing deadlines and penalties

Audit reports

For the financial years commencing on or after 6th April 2008 the filing deadlines of private companies are reduced from ten to nine months and from seven to six months in the case of public companies.

Full calendar months for filing periods have also been introduced. Where the accounting period ends on a month end, the accounts filing period will end on a month end, except for the first accounting period.

It is a new criminal offence, punishable by a fine, for an auditor to knowingly or recklessly cause their report to include any matter that is misleading, false, deceptive or causes that report to omit a statement relating to problems with the accounts. This provision has caused concern to auditors when recklessness will be judged against the risk based approach in auditing and honest mistakes will be punishable by criminal penalties.

With effect from 1st February ‘09 the Companies House penalties for late filing will change as follows:

not more than one month late - £150 (private company) / £750 (public company) between one and three months late- £375 (private company) / £1,500 (public company) between three and six months late- £750 (private company) / £3,000(public company) more than six months late-£1,500(private company)/£7,500(public company)

The above fines will be imposed when the accounts are eventually filed with the Companies House.

Liability limitation agreements For the first time auditors will be able to enter into liability limitation agreements with their corporate clients.

The scope for this limitation is very wide and covers the auditor’s liability to the company for any negligence, default, breach of duty or breach of trust in respect of the auditing of the company’s accounts during the financial year to which it relates. The agreement

Secretary The appointment of a company secretary for private companies is optional while it still remains mandatory for the public companies. If there is a specific reference in the articles of the company to have a company secretary then this will have to be amended by passing a special resolution and submitting to the Companies House with an updated version of the articles. If the articles only refer to the company secretary’s duties there is no need to make an amendment. However, the tasks usually undertaken by the company secretary (such as filing the annual return, the annual accounts and notifying changes in share ownership at Companies House) will still have to be undertaken and the directors will need to ensure that these tasks are delegated to someone so that the company continues to meet its statutory obligations. Company secretaries can still be corporate.

From 6 April 2008 all companies will be able to execute documents by the signature of a single director in the presence of an independent witness who attests the signature. Previously, the execution of a document required the affixing of the company seal or the signature of two officers. However, companies may still choose to execute documents by means of affixing the Asian Voice & Gujarat Samachar - 2008

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Accountancy company seal or the signature of two officers (which need not be witnessed).

Annual general meetings The Act provides that private companies will no longer be required to hold an AGM, unless they wish to do so.

This means that they will not need to lay their accounts or appoint an auditor, if they have one, at an AGM. Shareholders will, however, still be entitled to receive the accounts. An existing company must continue to hold an AGM unless a resolution is passed to change the articles to remove references to AGM’s. Public companies must still hold AGM’s.

Resignation of auditors In the case of a private company, or a public company that is not a quoted company, an auditor leaving office will have the option to submit a negative statement that there are no relevant circumstances that should be brought to the attention of the members or shareholders. For such clients, if the auditor ceases to hold office before the end of their term of office, they will be required to notify the ‘appropriate audit authority’ together with reasons for leaving office, even though there may not be such circumstances that require to be brought to the attention of the members or creditors.

The company too is required to inform the appropriate audit authority wherever the auditor ceases to hold office mid-term.

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BPO – a modern age boon Small and mid sized accountancy firms have an unique opportunity to transfer data entry, book-keeping, corporate submissions, VAT computations and pay roll to accountancy firms in India.

This will save cost, offer growth opportunities and efficiency.

Advancement in tele-communications and internet services have resulted in huge cost reductions and brought people across the continents closer, creating a modern economy with multi location offices. India and UK have enjoyed ageold trade relations and in recent times have laid strong foundations of business process outsourcing (BPO) and technology transfers.

This decade has witnessed India emerging as the foremost BPO destination in the world. Although, BPO services started on the back of information technology and IT enabled services, in a short time it has grown into a full-fledged back office service provider. This includes bookkeeping & accounting, inventory & logistics, data processing of every kind, payroll processing, tally marketing, insurance processing and services such as medical transcription, tax assessment, bank auditing, legal support and research and development services.

It is widely believed that BPO services offer the advantage of lower employee costs as well as professional expertise.

Unlike manufacturing, BPO is all about 'empowering' because it is a collective result of human talent. Hence, BPO’s prime requirement is not only savings of cost but also improvisation and up gradation of talent resulting in consistent and excellent performance.

The essence of BPOs is best defined

Rajesh Dhruv

by N R Narayan Murthy, Chairman & Chief Mentor of Infosys Technology who said, "Our core corporate assets walk out every evening. It is our duty to make sure that these assets return the next morning, mentally and physically enthusiastic and energetic".

The BPO industry, although in a nascent stage, has surpassed almost all other sectors in recent times. The industry initially started as captive back offices of global giants such as British Airways and GE. But the year 2000 saw the emergence of independent BPOs and in the last few years infotech giants such as Wipro, Infosys, Tata Consultancy and Satyam have put the industry in top gear. Recently services arms of giants like IBM, HP and Accenture have established and expanded their back offices in a big way with many global players seeing India as their sole back office.

The global outsourcing market is estimated at US$ 310 bn of which India’s $11 bn is still a tiny share of 4%. However this has been growing rapidly over the last few years and now provides employment to half a million people. As a matter of fact, India stands tall not only as the BPO of top 10 airlines of the world but also of global giants like Barclays, BT, Aviva, Cisco, HP, HSBC, Norwich Union, GE, Tesco, Prudential, Nokia and now BBC. The market has a huge potential for UK and India.

For large companies, a captive BPO is ideal and convenient but for small and medium sized firms, it would be appropriate to outsource with a third party. Captive units demand greater management involvement and this may end up in higher costs.

According to Indian infotech apex body NASSCOM, the Indian Asian Voice & Gujarat Samachar - 2008

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BPO sector, at its current momentum, can reach around US$ 30 billion in export revenues by 2012. However, the sector can set itself a target of US$ 50 billion (approximately five times its present size) in export revenues by 2012. The buyer (i.e. customer) profile of the sector shows increased diversification in terms of geography and size. Buyers from the UK, continental Europe and Asia Pacific are increasingly offshoring delivery of business processes to India. Similarly, there is increased awareness and adoption amongst mid-sized and small buyers.

But then BPOs have unique problems of differing work cultures and entrepreneurial backdrops and hence a BPO should work like a perfect marriage. Like a marriage, a BPO requires mutual understanding and appreciation of strengths and weaknesses of both firms and a strong will to grow and add value to the relationship.

Besides emerging technology, telecom, travel and transportation, segments such as media, publishing, pharmaceuticals, life sciences, HR, knowledge services, procurement services, energy and utilities represent significant untapped potential.

Although both companies would like a complete transition in the shortest possible period in order to save costs and lower the impact on business activities, 'BPO transition' should be undertaken without any short-cuts and with intensive efforts of all involved. Management should involve every team member and take care of socio-economic situations affecting the existing team

and balance the cost reduction objective with creation of convenient and comfortable zones for minimum impact on human resources at all levels. The cost benefit analysis of BPO is quite simple; the average salary of a data entry operator or accounting officer is US$ 24,000 or GBP 18,000 whereas the cost in India is about US$ 7,000 or GBP 3,500. BPOs offer a win-win proposition for both the parties concerned.

Although some concerns are raised about BPOs taking away jobs from the West, the history of trade and industry has shown polarisation of activities. In the past while China manufactured textiles for the world, Europe provided armaments and technology. Europe continues to hold sway over aerospace and automobile technology which in turn places mid and small European manufacturing and research firms in a unique position of partnering with Indian manufacturers and providing technology transfers.

There are concerns about adverse currency movements and wage inflation in India, putting pressure on the operating margins of providers. Another challenge for India is the growing competition from other offshore/ nearshore BPO destinations such as Philippines, Eastern Europe, Latin America, and China. But with software & BPO integrating even more closely, the knowledge services industry will scale the maturity curve further, focusing on creation of “BPO hubs” and increasing employability by facilitating the development of BPOspecific education training.

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