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Accounting is one of the most vital parts of business operations. Every company in every industry needs it, and as a result, accounting professionals are the most in-demand roles worldwide. Due to the high demand, you’d think that accounting and finance would be one of the most stable and sought-after industries where talent would be abundant. Unfortunately, that is not the case. An accounting shortage is happening, and it continues to impact companies worldwide. 

According to The CPA Journal, universities in the US have seen a significant decrease of 33% in candidates sitting for the CPA Exam in accounting programs. In 2022, the US saw its lowest number of exam takers for the past 15 years. Given that getting an accounting degree takes multiple years, there is a direct correlation between that and the accounting shortage experienced by companies. Because of the shortage of local accountants, companies are looking elsewhere and directing them to outsourcing solutions from the Philippines. 

Why is There an Accounting Shortage in the First Place?

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One of the leading causes of the shortfall is the drop in students seeking accounting degrees. Because accounting requires a lot of hard work and ongoing education to stay up-to-date on regulations, many students view accounting as a less appealing career path. Furthermore, prospective talent has been pulled away from accounting by the rise of other disciplines that are perceived as more active and profitable, such as technology, finance, and data science. As a result, the pool of aspiring accountants entering the industry is getting smaller. However, the declining number of accounting students is not the only factor contributing to the ongoing accounting profession crisis. Here are a few more reasons why the accounting shortage is happening: 

Retirement of Baby Boomer Accountants

There is a significant labor shortage due to baby boomer accountants retiring. Many of the accountants in this generation have worked for many years in the field, and as they approach retirement age, they are leaving a wealth of knowledge and expertise that is hard to replace. There is a lack of seasoned accountants who can mentor the next generation and occupy senior posts since the rate at which these experienced professionals are leaving the workforce outpaces the number of new graduates entering the field. 

Changing Skill Requirements

The accounting industry has seen a shift in skill needs due to technological advancements, which have exacerbated the shortage. Advanced data analytics, automation, and artificial intelligence are increasingly essential to accounting procedures nowadays. Because of this, accountants need to be proficient in contemporary technology and classic accounting expertise. Nevertheless, the skills required by employers and those who are now in the workforce differ, as not all professionals have been able to keep up with these developments. Finding accountants knowledgeable about the newest technologies and accounting concepts has become more difficult as a result. 

Increasing Regulatory and Compliance Demands

There is a greater need for qualified accountants due to the increasing complexity of regulatory and compliance requirements. Stricter rules apply to industries like manufacturing, healthcare, and finance, necessitating businesses to keep accurate financial records and comply with multiple legal requirements. As a result, accountants now have more work to do and are in greater need of having specialized knowledge in fields like company governance, tax law, and auditing. The need for certified accountants with experience in these fields is greater than the supply, exacerbating the shortage as these demands keep rising. 

Perception of the Profession

A contributing factor to the shortage is how people view the accounting field. Many people have the impression that accounting is a boring, number-crunching profession that requires lengthy hours at busy times like tax season. This impression may discourage prospective students from choosing accounting as their career, especially those from younger generations who could place a higher value on work-life balance and job happiness. Although ongoing, efforts to reposition accounting as a dynamic discipline with chances for technical innovation and strategic decision-making have not yet had a substantial impact on these impressions.  

These factors play a significant role in the ongoing accounting shortage. Companies are feeling the effects of the talent crisis, leading to delayed and error-filled financial reporting, higher recruitment costs, compliance risks, and even stunted growth and strategic decision-making. For the accounting staff in companies, burnout is inevitable due to heavier workloads. Companies are now looking for alternative routes when securing accounting talent, and outsourcing to the Philippines is one of those strategies. 

Is Outsourcing a Strategic Response to the Accounting Shortage?

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Many businesses are seeking the traditional approach of outsourcing solutions as a calculated approach to close the skill gap in accounting as it becomes more and more of a problem. This strategy makes it possible for companies to hire qualified accountants from all over the world, so even in the face of local staff scarcity, their financial processes may continue to run smoothly and legally.  

Global Talent Pool

Through outsourcing, businesses may access a worldwide network of accounting experts, many of whom have the particular knowledge and abilities required to manage intricate financial operations. Because of their skilled labor and affordable solutions, nations like the Philippines have grown in popularity as destinations for outsourcing accounting services. Businesses may maintain high standards in their accounting procedures without being limited by local labor constraints by utilizing talent from these places. 

Cost-Effectiveness and Flexibility

Outsourcing provides financial savings and assists in reducing the risks related to a skills shortage. Operations like bookkeeping, payroll, and tax preparation can help businesses cut down on overhead expenditures, as they would be more costly to handle internally. Furthermore, outsourcing companies offer flexibility, freeing businesses from the constraint of lengthy hiring procedures or long-term contracts to scale services up or down according to their needs. 

Focus on Core Business Functions

Businesses are able to concentrate more on their core operations by outsourcing accounting chores. Small and medium-sized businesses (SMEs), who might lack the funding to have an extensive accounting department, can especially benefit from this. By outsourcing, these companies can focus their efforts on expansion, innovation, and customer support while ensuring that professionals handle their financial administration. 

Enhanced Compliance and Risk Management

Many businesses struggle to navigate the complicated world of financial rules, particularly in an increasingly international market. The ability of outsourcing companies to handle compliance across several countries lowers the possibility of mistakes and fines. In sectors like banking, healthcare, and manufacturing, where adhering to regulations is crucial, outsourcing accounting tasks may be essential to guarantee compliance with national and global standards. 

Outsourcing offers a workable and smart answer to the ongoing problem of the accounting shortage that affects businesses globally. Businesses collaborating with outside suppliers may close the talent gap in the short term while simultaneously setting themselves up for long-term success by gaining access to cutting-edge technology, more flexibility, and cost savings.  

Secure Your Accounting Team Needs with iSWerk!

t is more important than ever to solve the talent shortage in accounting in a competitive corporate climate. Outsourcing is a potent option that gives you access to knowledgeable experts, affordable services, and the newest innovations in technology. Businesses may ensure their financial processes function properly even in the face of talent shortages by collaborating with an accomplished outsourcing provider like iSWerk in the Philippines. Don’t allow the scarcity hinder your company’s growth. Contact us for a free 15-minute consultation to see how our customized solutions may help you overcome obstacles and propel your success.