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Even CPA Firms Are Facing “Supply Chain” Issues
It is no secret that the US is facing a serious shortage of accounting professionals which will result in severe circumstances for the CPA profession and the market for CPA firm services. The latter point is always overlooked.
What people might not realize is how dire the situation is, and that there are proven options available to help combat the issues this shortage is causing.
The accounting shortage problem is being further compounded by a lack of U.S. students majoring in accounting, with the AICPA finding that graduate numbers declined nearly ten percent from 2012 to 2020. The Bureau of Labor Statistics also projects a 22% growth factor for the demand for accountants for the next 5 years.
More specifically, the AICPA is projecting a need of approximately 135,000 new accounting professionals annually, The US university system is projected to produce approximately 75,000 graduates annually, not all of whom will enter the accounting profession.
This is an issue that is not going away anytime soon. One issue that people have failed to understand is that there is a significant difference between simply the number of professionals available for these accounting roles and actual “talent” that is available.
Talent, which US businesses rely on for quality work product and effective results, takes time and effort to accumulate and train properly. So, this problem we are facing is not just a matter of headcount, but a real talent shortage that will not fully be solved in the next decade.
As a result, we have witnessed CPA firms turn toward increasing their fees and even cutting back work for clients who are not willing to pay more for quality services.
These moves have particularly hurt US small and medium sized businesses (SMBs) who do not necessarily have the financial cushion to pay more for these increasing costs. And it is not just a matter of costs.
The other issue that almost never gets mentioned dovetails into the “Supply Chain” in the headline. As the amount of accounting professionals continue to shrink and as CPA firms continue to be hesitant to take on new clients, the demands for their services are increasing at a significant rate. As the economy expands, as new tax complexity gets introduced by legislators, and as regulatory agencies impose new standards, who will help guide these companies through these challenges.
Although many of the larger U.S. accounting firms, including the “Big Four” have leveraged offshore talent centers in order to help meet client demand, their focus has never been on US small and mid-sized companies (SMBs). It may be interesting to note that approximately 40% of the Big Four personnel classified as part of their respective US firms are based in India.
I have over four decades of experience managing professional services firms, I have managed teams/firms ranging in size from 100 to 6,000 tax, audit, and advisory professionals. In order to succeed today, US based CPA firms will have to seriously consider remote talent solutions. It is not a matter of if, but rather when and how.
Among these solutions must be offshore talent centers staffed with professionals that will be considered an extension of the CPA firm’s team in the US. They must consist of the highest quality of trained professionals, be focused on timely delivery and must constantly be communicating with the “home” office in the US.
Again, the high demand for US CPA services is far too high at this stage for the declining number of graduates who are obtaining accounting degrees. The numbers simply do not add up. These skills will become revered, similar to the wave of tech professionals that the US has experienced in the past, but that cycle is years down the road.
For the next decade, in order to properly serve US SMBs and the entire marketplace, both US CPA firms and US SMBs will have to reap the benefits of the use of remote or international talent centers from reputable experienced providers of talent in order to make up for an accounting professional shortage that we are currently dealing with, and will continue to deal with for the next decade.
About the Author
Frank is the former Chairman and CEO of Deloitte Italy where he managed 4,500 professionals and $750 million in revenue. Prior to this international role, Frank served as the Vice Chairman for Deloitte U.S., directly supervising all of Deloitte U.S.’s offices on the West Coast.
In addition to Frank’s Big 4 experience he was the President and CEO of Herbalife International Inc., a publicly traded nutrition company that did business in 52 countries with $2 billion of sales.
In his current role, Frank works closely with alliantgroup’s partners, advising them on issues such as revenue enhancement strategies; talent development and retention strategies; succession planning and practice management.
