The accounting skills shortage: Innovatively navigating the gap

Our Co-CEO, Greg Maslov, was recently featured in the The Accountant’s Employee Recruitment and Retention supplement.

Read the original article here.

The accounting industry finds itself at a critical juncture, grappling with a significant shortage of skilled professionals. This talent gap is propelled by a combination of factors such as the demographic shift caused by the rapid retirement of Baby Boomer accountants, a lack of interest among younger generations, and a skills mismatch resulting from the evolving nature of the profession. Innovative approaches and solutions are needed to ensure that we bridge this formidable gap as quickly and as effectively as possible. 

Where have our accountants gone?  

The shortage of accountants can be attributed to several factors, the most prominent being the demographic shift within the industry. According to a report published by the Professional & Business Services Council (PBSC) and the Financial Services Skills Commission (FSSC), an average of 32% of UK firms are affected by shortages in financial, professional and business services skills. In addition, the American Institute of Certified Public Accountants (AICPA) estimated that a staggering 75% of Baby Boomer accountants were eligible for retirement by 2020. Even more alarming is that 2024 is “Peak 65” by the U.S. Census Bureau, where record numbers of retirements will continue to occur - highlighting that the accountant shortage is a global trend.  

Additionally, negative perceptions of the profession as repetitive, stressful, difficult and expensive to qualify and prone to technology disruption dissuade younger generations in developed countries from pursuing careers in accounting – many opting for roles in computer science, healthcare, and engineering instead. Traditional education models also contribute to the skills mismatch, as they may not adequately address the evolving demands of the industry, particularly in areas such as data analytics and automation. Public accounting firms also suffer from increasing turnover rates of young accountants that enter the profession, fueled by long hours, demanding workloads, and competitive salaries, further exacerbate the shortage. 

Extensive impact on the economy 

The shortage of skilled accountants has far-reaching consequences for the global economy. A Korn Ferry report estimates that the global talent crisis could result in a shortage of 85.2 million workers and US$8.5 trillion unrealized revenue by 2030 – with financial and business services emerging as the most affected sector. Hence, the shortage of skilled accountants will have far-reaching consequences for the global economy. 

A CEO from one of the top 15 networks, who is deeply involved in a strategic partnership with us, once remarked: “Firms may miss out on valuable opportunities as they decline potential clients due to insufficient resources, and the loss of expertise through the retirement of experienced personnel puts our member firms at a competitive disadvantage, hindering their ability to adapt to market trends and impeding overall growth. This can dramatically impact their ability to take advantage of the sizable valuations the market is currently willing to bear with the introduction of Private Equity in this space.” Managing Partners must prioritize developing solid workforce strategies and succession planning to maximize the value of their firms even if they have no intent to sell.  

Multiple innovative solutions available 

To address the accounting skills shortage, firms should embrace innovative solutions that not only attract new talent but also retain and develop existing professionals. Investing in technology and innovative workforce models to automate repetitive tasks is a fundamental step in freeing up skilled professionals for more strategic work. Integrating the concept of transforming great technicians into leaders capable of managing international teams, firms can foster a culture that values global collaboration and leadership development. Data analytics training ensures that staff can provide clients with valuable insights, positioning the firm as a trusted advisor. Continuous upskilling and reskilling initiatives are essential to equip accountants with the evolving skills required in the industry, including global communication, ESG and DEI, which are critical in attracting more young people to the profession. 

Promoting flexibility, such as offering remote work options and flexible schedules, is crucial in attracting and retaining younger generations of accountants. A positive work environment that fosters engagement and well-being is equally important for nurturing a skilled and motivated workforce. 

Innovative solutions for talent and efficiency: embracing a global workforce  

Offshoring, or importing workers without needing to relocate them to your client market, emerges as a good strategic response to the global talent shortage. This approach, while not novel, gains traction across industries including accounting, where it addresses talent gaps and enhances cost and operational efficiency. A 2023 World Economic Forum Future of Jobs survey indicated that over 60% of those surveyed highlighted that bridging the gap locally was a challenge, with 25.5% considering outsourcing significant areas of work in the next 5 years.  

Globally based Centers of Excellence as a catalyst for growth 

Centers of Excellence (COEs) have become popular in a wide range of industries, and in accounting we have seen the rise of expertise hubs which support the delivery of superior accounting services which, through specialized knowledge and capabilities, enhance the overall value provided to clients while solving localized resource challenges and succession planning risks. 

The benefits of successful COEs include: 

• Better operational efficiency. 
• Improved client satisfaction due to faster turnaround times and cost savings. 
• Enhanced talent acquisition and retention, with cost savings enabling higher salaries to retain the local talent. 

• Reduced labor costs due to the strength of the currency in offshore locations. 
• Improved resource allocation to free up internal teams for higher-value work, potentially generating additional revenue opportunities and enhancing the people management to lead diverse, international teams. 
• Reduced infrastructure costs: COEs can provide access to modern technology and infrastructure at lower costs compared to setting it up domestically. 
• COEs can offer extended working hours, improving responsiveness to clients across different time zones.  
• Access to specialized skills with access to a wider pool of talent with specialized skills in specific areas like data analytics or automation. 
• Innovation potential where COEs can serve as testing grounds for new technologies and processes, undertaking preliminary or administrative tasks that require technical knowledge for committees and Special Interest Groups (SIGs), and even handling more complex marketing-related tasks such as technical slides and events, fostering innovation within networks, associations and their member firms. 

Conclusion 

Even though the accountants in your local market might be facing extinction over the next 20 years, there are novel ways using our global accounting community and new technologies to have ever greater positive impact in the ways Accounting Firms can service their clients, people and communities. The accounting industry stands at a watershed moment, and the next few years will prove to be even more challenging for all. By implementing innovative approaches and the early adoption of workforce planning strategies, the sector can navigate the current skills shortage and emerge stronger and more resilient.