A recent survey by Personiv revealed that 90% of financial executives have outsourced some of their accounting functions. This significant surge in outsourcing can be attributed to the persistent talent shortage in the accounting industry.
The CFO Pulse report surveyed 278 accounting and finance leaders from more than 20 U.S. industries such as advertising, technology, and finance. The report revealed that 83% of these leaders recognize the shortage of accounting talent, which is a big leap from 70% in 2022. Meanwhile, 10% of these leaders claim the situation has worsened.
“The accounting talent shortage is real, and companies are unquestionably looking for new ways to support and scale their teams,” Personiv’s Global Finance and Accounting Outsourcing Head Matt Wood said. Wood continued that it is critical to understand and consider every possibility for filling roles without losing focus on bigger goals.
Facing years of shortage
The accounting profession has been facing a shortage of qualified talent for several years, driven by various factors. The increasing complexity of financial regulations and the rising need for specialized accounting skills have significantly heightened the demand for professionals in the field.
But many existing accountants lack the necessary expertise in emerging areas such as data analytics and financial technology, leaving a gap in the talent pool. The aging population and a declining interest in accounting careers have further exacerbated the issue.
The number of first-time accounting enrollees dropped by 33%, from 48,004 in 2016 to 32,188 in 2021. Meanwhile, the American Institute of Certified Public Accountants (AICPA) reports that 75% of its members are already at retirement age, further contributing to the need for more qualified accounting professionals.
Outsourcing to mitigate accounting shortage
In response to the talent shortage, businesses have increasingly turned to outsourcing as a practical solution for their accounting needs. Outsourcing provides companies access to specialized expertise and resources without the overhead associated with hiring and managing an in-house accounting team.
Brazil, Colombia, Costa Rica, the Philippines, India, Malaysia, and Mexico are among the top accounting outsourcing destinations, each with its own set of benefits. These nations offer a combination of cost-effective labor, skilled talent, and favorable regulatory environments, making them attractive outsourcing destinations.
Businesses outsource accounting functions primarily to address the talent shortage while ensuring that essential financial tasks are completed efficiently and accurately. By outsourcing, companies can tap into a pool of qualified accountants with the necessary expertise to meet their specific needs while reducing costs and improving operational efficiency.
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Zaki, A. (2024, August 7). 90% of CFOs are outsourcing accounting functions. CFO. Retrieved August 26, 2024, from https://www.cfo.com/news/personiv-cfo-pulse-survey-finance-accounting-talent-market-outlook-matt-wood/723545/
Zaki, A. (2023, November 10). What CFOs Think of the Accountant Shortage. CFO. Retrieved August 26, 2024, from https://www.cfo.com/news/what-cfos-think-of-the-accountant-shortage-cpa-Jack-Hartung-Chipotle/699394/
