How outsourcing is helping tackle the accounting industry skills shortage

It almost sounds too good to be true. In 2014, as a little tune called Happy swept the globe and Russia invited the world to the Sochi Winter Olympics, the Australian Financial Review reported that accounting firms could “afford to be selective” when hiring new staff as it was “not hard to recruit in the current market”^[1]. It was the ultimate employer’s market and Happy may well have been the theme song for recruiters at both large and boutique accounting firms.

Well, haven’t times changed? Eight years later and CPA Australia has declared most people in the accounting industry will tell you there are “too many accounting jobs and too few accountants”^[2]. This is supported by CBA’s Accounting Market Pulse Report, which shows at least 93% of accounting firms consider finding quality staff a challenge^[3].

Why are accountants in demand in Australia?

While accounting firms were already noticing a talent squeeze before 2020, the global pandemic turned a concerning situation into a dire one. Having long benefited from a huge influx of foreign talent (the number of international students finishing undergraduate accounting degrees soared by 500% from 2001 to 2012^[4], Australian firms were forced to do more with less as COVID-19 changed the landscape.

And while reopening international borders has allowed some accountants and auditors into the country, the Australian Financial Review’s latest Top 100 Accounting Firms list has revealed talent shortages are still being felt across the industry. Open roles at the big four consulting firms remain higher than 500 per firm, while mid-tier organisations have vacancies averaging in the double digits^[5]. As one industry executive says: “The hunt for talent and accessing skilled labour is keeping (people) awake at night.”^[6]

The staffing crisis hitting Australia’s accounting firms is shaping as the biggest challenge facing the profession in 2023. While the sector has continued to perform well (the combined revenue of Australia’s top 100 firms rose 14.5% to $14 billion last financial year^[7], the accounting skills shortage and rising wage pressures threaten to stifle ongoing growth.

Given this, it is no surprise both accounting firms and other businesses are increasingly turning to outsourcing providers to help meet their financial services needs. With 37% of small businesses engaging third parties to assist with their accounting and bookkeeping needs^[8], accounting is already the most outsourced industry and that is unlikely to change any time soon given the current skills shortage.

What are the benefits of outsourcing accounting?

The key reason to outsource accounting services in the current environment is the ability to tap into a larger global talent pool. With a shortage of accountants in Australia, many businesses would be forced to pay higher wages or risk compromising quality if not for the presence of quality offshore recruits. For example, the Philippines is home to more than 188,000 Certified Public Accountants and an average of 7,250 more join the workforce every year^[9].

Besides a greater talent pool, one of the greatest benefits of outsourcing is it reduces costs without diminishing quality. The cost of living in nations such as the Philippines means businesses can save as much as 70% on labour, not to mention eliminate expenses associated with drawn-out hiring processes.

Outsourcing also allows businesses to easily scale accounting staff numbers up or down depending on demand or seasonal requirements such as tax season, while executives and employees alike relish the chance to focus more time, energy and resources on rewarding work than focusing on routine and time-consuming tasks that can be completed by offshore colleagues.

Which skills are in demand in accounting?

Amid an accounting skills shortage, outsourcing is one of the fastest and most cost-effective ways to fill various roles but there are several positions that are proving particularly attractive to onshore operators.

• Payroll processing: if a business’s best asset is its people, ensuring the seamless and fair payment of those people is essential. Offshore payroll services are responsible for calculating employee’s salaries, bonuses, taxes and deductions, distributing their wages and ensuring every box is ticked when it comes to tax laws and regulations.
• Tax preparation: few things can be more stressful for an organisation than falling behind on tax preparation or failing to perform it to an adequate standard. Outsourcing this function to experienced offshore accountants means the likes of financial statements, receipts, bookkeeping and payroll are crosschecked and businesses remain compliant with local, state and federal laws. Tax returns are also submitted on time and with unerring accuracy.
• Accounts receivable/payable: quality outsourcing providers are experts at nurturing talent pools, with highly qualified accounts receivable and payable staff high on the wish list of their onshore clients. A truly valuable resource, they are experts at monitoring and managing money owed to businesses (accounts receivable) and that owed to vendors and other sellers (accounts payable).

What does the future hold?

The accounting industry is not alone in facing a skills gap. Major employment firms are predicting the global labour shortage will last for years^[10], while one study of talent supply and demand in 20 economies found there will be a talent shortfall of more than 85 million people by 2030^[11]. They are concerning numbers in anyone’s language but the smart organisations are those already searching for new ways of doing recruitment. Rather than standing still, they are looking outside their four walls and finding that outsourcing is a simple but highly successful strategy for overcoming the accounting skills shortage.

Accounts payable (AP) is one of accounting’s essential functions. Learn why it is so important, explore the challenges faced by its practitioners and discover various tips on how to streamline the AP process for your business.

Reference:
[1] Australian students turn away from accounting (afr.com)
[2] Too many accounting jobs, too few staff: why staff retention is key | CPA Australia
[3] accounting-market-pulse-report.pdf (commbank.com.au)
[4] Australian students turn away from accounting (afr.com)
[5] Top 100 Accounting Firms: Staff shortages bite revenue, fatigue workers at accounting firms (afr.com)
[6] Top 100 Accounting Firms: Staff shortages bite revenue, fatigue workers at accounting firms (afr.com)
[7] Top 100 Accounting Firms: Staff shortages bite revenue, fatigue workers at accounting firms (afr.com)
[8] 27 Eye-Opening Outsourcing Statistics (2022 Update) (capitalcounselor.com)
[9] Numbers that count - BusinessMirror
[10] The labor shortage could last for years, major employment firms predict. Here's why | Fortune
[11] Message from Korn Ferry