Navigating the Shifting Landscape of Accounting: Challenges in Talent Acquisition

The accounting industry is undergoing a significant transformation, driven by a confluence of factors that are reshaping the labor market and making it increasingly challenging to find, recruit, and hire top talent. There are significant shifts including the aging workforce, the migration of talent to consulting roles, declining graduation rates in accounting disciplines, technological advancements, and the broadening career paths available to accounting professionals.

Aging Workforce and Retirement of CPAs

One of the most pressing issues in the accounting field is the aging demographic of Certified Public Accountants (CPAs). Data from the American Institute of CPAs (AICPA) indicates that a large proportion of licensed CPAs are approaching retirement age. According to a 2020 report, approximately 75% of AICPA members are over the age of 50, suggesting a looming talent shortage as these professionals retire. The retirement of these seasoned CPAs not only depletes the workforce but also results in a loss of institutional knowledge and expertise, which are crucial for both training new staff and managing complex accounting tasks.

Shift of Talent to Consulting Companies

The trend of accounting professionals moving toward consulting roles compounds the issue of an aging workforce. Consulting firms increasingly attract talent by offering more dynamic and varied work environments compared to traditional accounting roles. Large firms like Deloitte and PwC, regional CPA firms, and numerous outsourcing firms have all expanded their consulting services, often promising higher remuneration and the opportunity to work on more varied projects. This shift diverts talent away from conventional industry roles, exacerbating the talent shortage in core accounting functions.

Decline in Accounting Graduates

The pipeline of new accountants is also shrinking. Data from the report, “2023 Trends: A Report on Accounting Education, the CPA Exam and Public Accounting Firms’ Hiring of Recent Graduates,” found that about 47,000 students earned a bachelor’s degree in accounting in the 2021–22 school year, down 7.8% from the previous year. The number of students earning a master’s degree in accounting slipped 6.4% to 18,238.  Furthermore, From the 2012–13 school year to the 2021–22 school year — the 10 most recent years of available data — the number of accounting graduates dropped 16.9%.  This trend is worrisome for an industry already facing shortages due to retirements and sector shifts. The declining interest in accounting degrees is partly attributed to the perception of accounting as less engaging compared to other STEM fields, which may be perceived to offer more innovative and technologically integrated career opportunities.

Technological Advancements and Their Impact

Technology is another critical factor reshaping the accounting landscape. The adoption of advanced technologies such as artificial intelligence (AI), machine learning, and automation is transforming traditional accounting roles. A survey by McKinsey Global Institute predicts that by 2030, automation could displace up to 200,000 accounting roles in the United States alone. However, this shift also creates demand for new skills, as accountants are now expected to navigate complex software and contribute to strategic decision-making processes. There is a growing need for accountants who are not only numerically proficient but also technologically adept and strategically minded.  Again, professionals with these traits tend to gravitate toward the consulting models.

Increased Career Options for Accounting Professionals

Today, accounting professionals face a plethora of career paths beyond traditional roles. Options now include outsourced accounting services, positions within corporate finance departments, and opportunities in burgeoning fields such as financial technology. Moreover, the skills of accounting professionals are highly transferable, making it easier for them to move into other areas of business or even entirely different industries. This flexibility, however, while beneficial to individuals, poses a challenge for traditional firms trying to recruit and retain talent. 

The Shift to Remote Work and Improved Work Environment

The COVID-19 pandemic accelerated a significant shift towards remote work, which has had a profound impact on the accounting industry. This transition has not only altered where accountants work but also how they prefer to work. This move towards remote work is particularly attractive to top talent in the accounting field, who increasingly value flexibility in their work arrangements. Remote work options allow employees to better balance personal and professional commitments, leading to improved job satisfaction and retention rates.

 

Moreover, the ability to work remotely has expanded the talent pool from which firms can recruit, no longer limiting them to candidates in specific geographic locations. However, this shift also means that firms must compete on a national or even global scale for top candidates, further intensifying the battle for talent. Companies that can offer not just remote work but also flexible hours, a supportive virtual work environment, clear career paths, training and development, and a collaborative team culture are finding themselves better positioned to attract and retain highly skilled accounting professionals in a competitive market.

Final Notes: The Case for Outsourced, Fractional Accounting Firms

Given the myriad challenges discussed—from the retirement of seasoned CPAs to the allure of alternative career paths—it is becoming increasingly viable for many businesses to turn to outsourced, fractional accounting firms. These firms offer a compelling solution by providing access to a team of experts who can deliver comprehensive accounting services on a part-time or as-needed basis. This model not only mitigates the talent shortage by providing access to a pool of professionals with diverse expertise but also offers flexibility and cost efficiency, especially crucial for small to medium-sized enterprises that may not require or cannot afford a full-time accounting department. Hiring an outsourced accounting firm allows businesses to maintain high standards of financial compliance and strategic insight, adapting swiftly to the industry’s evolving landscape without the burden of recruiting and retaining full-time staff. This strategic approach not only addresses immediate staffing needs but also positions companies better for future growth and adaptation in a rapidly changing economic environment.