The accounting talent shortage has become a growing concern for the industry. In the US alone, the American Institute of Certified Public Accountants (AICPA) estimated that 75% of its members reached retirement age by 2020.
Meanwhile, the number of people seeking an accounting degree dropped by the largest single-year percentage since 1995, suggesting it's less desirable, and more competitive, for young people to pursue a career in it.
For those who are interested, the educational requirements and reputation for poor work-life balance can be a significant barrier to entry.
For example, starting salaries are notoriously low compared to other service-based professions, the 150-credit hour requirement for a CPA license is exhaustive, and the preparation required for the CPA exam is extensive.
All of this raises question marks over the future of the accounting profession. What happens when three-quarters of the industry does retire, and there aren't enough people to fill the gap? How does the profession transform its image to attract exciting up-and-coming Gen Z talent?
The outlook is troubling, but it could also be an opportunity.
Business impact of accountant shortages
The overarching consequence of a shortage of accountants is that firms will face significant challenges maintaining their workforce. That may look like:
Difficulty filling open positions. With a significant portion of the workforce retiring and fewer accounting graduates entering the field, the pool of available candidates is shrinking. Firms may become understaffed, which increases the risk of burnout, turnover, and client churn.
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Increase in wages. A shorter supply of qualified talent is causing a surge in entry-level salaries, with 47% of new talent saying a higher salary would convince them to stay in the profession. As some firms continue to increase their offers, others may struggle to keep up with the labour costs.
Efficiency and growth restrictions for companies. With fewer hands on deck, firms may find it difficult to meet deadlines, maintain high standards of service, and prioritize new clients. And without experienced leaders to guide the flow of business, the risk of human error goes up.
Accountant shortage solutions for firms
Despite the challenges, the talent shortage could also be an opportunity for firms to embrace new technology, creative solutions, and flexible working models to not only fill the gaps, but to increase the agility and resilience of their business strategy.
Here's how firms can respond to the shortage:
Accounting automation, AI, and practice management software
The most effective solutions to the talent shortage either ease the burden on current staff or fill the gaps left by unfilled roles. Accounting automation does both. And with task automation making up 35% of AI use cases in the industry globally, firms are already leveraging this technology to save time.
Accounting practice management tools like Karbon leverage automation to help accounting professionals save time on manual and repetitive processes, so they can focus on high value tasks.
Thanks to this automation in conjunction with other practice management features, firms using Karbon save 19.9 hours each week, per employee.
“With Karbon, we can automate the repetitive, low-value tasks,” says Joanna Alpe from Jeffrey Henrys LLP. “Our clients are ultimately getting better service and better value because of it.”
For many firms, this means they're able to do more—or the same—with less:
Young accountants want to be part of the digital transformation of the accounting industry. They want to be part of purpose-driven finance teams that offer more than accounting services to clients. They want to make a difference. They want to build strong relationships, and lead initiatives that change clients' lives.
Offshoring
Offshoring is becoming the new norm for the industry, with 52% of top performing firms planning to offshore to countries like India and the Philippines. And as the talent shortage increases, it's becoming an increasingly popular solution. Here's why:
Cost-effectiveness. Lower labor rates in many offshore destinations can significantly reduce accounting costs, which is especially attractive for routine tasks like bookkeeping and data entry.
Access to talent. While it might be harder to recruit locally, you can find equally qualified individuals with specific skillsets by offshoring to other locations. “People are people regardless of location,” says Isaac Smith, Founder of offshoring company, TeamUp.
Scalability. Offshore teams are typically more made-to-measure, enabling you to easily scale your accounting workforce up or down based on the fluctuations of business. Plus, offshoring is an opportunity to diversify your wealth of knowledge and experience, which drives innovation and growth.
Focus on core business. By offshoring routine accounting tasks, firms can free up their in-house team to focus on more strategic and client-facing activities.
24/7 operations: Due to the timezone difference, offshore teams can extend your operating hours, allowing for near-continuous work on projects.
Offshoring is often used interchangeably with outsourcing despite being different. Outsourcing involves contracting work to a third-party provider, regardless of location, while offshoring specifically refers to hiring accounting roles in foreign countries to reduce costs or access specialized skills.
Similar to offshoring, remote hiring expands the available talent pool for accounting firms, giving them greater flexibility when trying to fill a role.
Here's why it's gaining traction:
Wider talent pool. Companies can recruit skilled workers from a broader geographic area, not limited to their physical location. This can be especially helpful for finding accountants and bookkeepers with niche expertise.
Attract more talent. Remote work arrangements can attract and retain top talent by offering flexibility and improved work-life balance.
Reduced costs. Firms can save on office space and overhead expenses by employing remote accountants.
Increased productivity. Remote workers can be just as, if not more, productive than their office-based counterparts, and they are the most likely to be engaged over their hybrid or on-site counterparts.
Employee satisfaction. Offering remote work options can boost morale and satisfaction, leading to lower turnover.
Gig workers
Gig workers can be a great way for businesses to access specialized skills or handle temporary workloads without the commitment of hiring a full-time employee. Here's why:
Lower expenses. Businesses can pay gig workers for the specific work they need, saving on benefits and overhead costs associated with full-time employees.
More targeted recruitment and access to specialized skills. Rather than looking for the complete package in a new recruit, accounting firms can focus on candidates with the specific skills they need for one project or area of the business. This makes recruitment straightforward, without compromising on specialization.
Flexibility. Gig workers enjoy the flexibility of choosing projects and setting their own schedules, while accounting firms can scale their workforce up or down as needed.
How Karbon maximizes time and resources
Karbon offers a suite of features designed to standardize, streamline, and automate accounting tasks, maximizing time and resources for your firm. This includes:
Workflow processes. Work items can be automated, templatized, and set to repeat, making it easier to stay on top of tasks and deliver consistent results to clients.
Karbon templates. Firms can choose from hundreds of work templates to standardize their processes, replacing setup time with immediate action on projects. UK firm, Full Stop, was able to consolidate over 2,000 tasks with Karbon templates.
Client management. “We want to make the lives of our clients and our employees better,” says Melissa Stout from mAccounting. By leveraging Karbon as a single source of truth, firms like hers are able to achieve both of those goals by automating client requests and reminders, and optimizing the client experience with a premium client portal, conversation histories, and email generation features.
Karbon AI. By automating low-value tasks, suggesting quick replies to routine emails, and summarizing work and conversation histories, Karbon AI frees up accounting professionals to focus on more strategic tasks.
Billing. Karbon's billing and payments features “are simple to use and allow us to efficiently monitor budgets, pricing and team member efficiency,” allowing teams to send eSignature and approval requests, set up service types and pricing, and coordinate invoices and payments all in the one, secure platform.
Use practice management software to overcome talent gaps
Some have suggested policy changes to address the accounting shortage. New industry standards, a lower barrier to entry, more collaboration between firms and institutions. But change takes time to implement, and then to take effect. The talent shortage is affecting the industry now.
Practice management software like Karbon offers an immediate solution, allowing firms to automate workflows and deliver their best work, even after the shortage is handled.
To see how Karbon can transform your firm and help overcome talent gaps, book a demo today.
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Managing Editor, Karbon Magazine
Karbon offers a lot of great features, but I think the number one thing Karbon gives me is the assurance that I am on top of my game and focusing my time on providing value to the clients.
When we started, we were a six-person firm. Now we're down to five, and we're still doing the same amount of work… Karbon saves me more than 40 hours a week.
Many accounting firms are looking at their employee value proposition (EVP) to attract and retain staff. Learn how your firm can develop an EVP of your own.
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