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- More than 300,000 accountants and auditors in the USA have left their positions over the last 2 years.
- Many CPA firms and small businesses are scrambling to fill the gap through outsourcing.
- Will this bring opportunities to Indian Chartered Accountants and Accountants in general?
Accountants in the US are quitting
Over the last two years, more than 300,000 accountants and auditors in the United States have resigned from their positions.
According to the U.S. Bureau of Labor Statistics, approximately 136,400 openings for accountants and auditors are expected each year between 2021 and 2031.
Baby Boomers are retiring in large numbers. And the decreasing number of young people or Gen Zers studying accounting and taking the CPA Exam is unable to fill this gap.
Accounting and finance departments, in particular, are understaffed.
This shortage is evident across industries and sizes, but smaller and privately held businesses are getting more affected. And the situation is only expected to worsen in the future.
Why the decline in the numbers?
According to the Bureau of Labor Statistics May 2021 report, there were 1,318,550 Accountants and Auditors.
As of 2022, there are 665,612 actively licensed CPAs, according to the National Association of State Boards of Accountancy (NASBA).
However, both numbers have been substantially falling.
The dwindling number of accounting graduates: According to the 2021 AICPA Trends Report from 2019-2020, 72,923 students completed a bachelor’s or master’s degree in accounting.
It was a decline compared to the previous five years, which had anywhere from 76,000 to 79,000 accounting graduates.
A shortage of CPAs in the US: Previously, CPA applicants only needed 120 hours of higher education (similar to a bachelor’s degree) in most jurisdictions in the United States.
It seems that the extended 150 credit hours which is equivalent to a master’s degree, are discouraging students from obtaining the CPA. (A Master’s might cost them over $20,000.)
Then they have to spend over 300 hours preparing for the CPA exam, which has an average pass rate of 50%.
Considering all these, more students are becoming drawn to other qualifications, such as Master of Business Administration (MBA) or even Certified Internal Auditor (CIA) and Certified Management Accountant (CMA).
Unattractive Salary Package: Trevor Ward, a CPA and Founder of Multisig Media say, “According to Robert Half’s (a human-resources consulting firm) 2022 Salary Guide, the average starting salary for an Audit Associate in public accounting is $59,750.
Assuming the auditor works 70-hour weeks during busy periods and 45-hour weeks during the ‘normal’ season, they average 55-hour weeks. That equates to $21.50 an hour. For context, that’s less than DoorDasher which will deliver your dinner to you at the office.
Salaries don’t get much better as you progress to Senior ($72,000 avg.), and by the time you reach Manager, you’ve done five grueling busy seasons in exchange for your soul, to be barely crossing the $100,000 threshold.”
Accounting Software: Cloud-based small business accounting software has taken much of the time-consuming work out of bookkeeping.
Compared to 2.3 million Xero members globally, QuickBooks Online has a 62% market share of the small business accounting software industry globally.
The majority of QuickBooks’ subscribers are from the US.
The stigma of an uncool profession: The accounting profession often gets a bad rap. People tend to view accountants as shy, unexciting numbers crunchers who spend their days buried in financial statements. But the truth is that accounting can be a very exciting and rewarding profession.
Choosing another career avenue: Increasingly CPAs are getting into less boring and more lucrative fields such as risk management, buy-side financial analysis, corporate finance, forensic accounting, corporate banking, and fund management.
Revenue of accounting services in the United States from 2010 to 2022 (in billion U.S. dollars)
The growing US economy has fostered several entrepreneurial opportunities.
In 2022, there were 33.2 million small firms operating in the US, accounting for 99.9% of all businesses there. According to Revelio Labs Inc., a source of workplace data, the number of postings for U.S. accounting and audit roles totaled around 177,880 jobs in 2022 through November 30th.
Through 30th November, 113,400 of these positions were filled, a 15.9% decrease from the same period last year, according to Revelio.
Given how bad the situation is, American businesses, especially a lot of small and mid-sized ones are scrambling to find accountants abroad.
Businesses are hiring temporary workers or looking to outsource non-core activities as they face a weakening economy.
Outsourcing to talent hubs throughout the world may greatly increase the number of applicants a business can choose from. For instance, the southern neighbor of the United States is teeming with intelligent, bilingual people.
Mexico had more than 466,000 accountants and auditors in the second quarter of 2022. The United States had a considerably lower number of CPAs at that time despite having a population that is more than twice as large as Mexico’s. But one of the challenges that come their way is Mexico’s challenging labor laws.
That is when India and Indian Accountants come into the picture.
Job opportunities for Indian CA in the USA: US companies can benefit greatly from outsourcing to Indian Accountants which creates a pool of opportunities for the latter.
The proportion of young, English-speaking skilled professionals in India may be one of the greatest in the world. In India, there were over 3.50 lakh Chartered Accountants (CAs) which were members of the Institute of Chartered Accountants of India as of April 1, 2022.
This indicates that the nation has a wealth of talent and expertise to provide top-notch services to businesses in the US.
CPAs, Accounting Firms, and other businesses require a variety of services to manage their entire business. And India provides endless options for accounting services, from bookkeeping to financial statement preparation.
Cost Reductions – Indian skilled workers get compensated far less compared to certain other nations. There is no reduction in quality despite the lower price of the job that is produced.
Talented Professionals – Not just Chartered Accountants or Cost Accountants, but Indian Accountants, in general, have the expertise to manage even the most complex projects for clients.
Pro-outsourcing Regulations – India’s outsourcing regulations encourage foreign businesses to outsource accounting services there and guarantee a fuss-free experience.
Closing…
The accounting industry needs to take measures to appear more appealing and desirable.
They need to help people understand how exciting this role can be and where it might lead them. Younger generations would rather have a flexible work schedule and more freedom than one that breaks your back.
Regardless of whether they are domestic or international talent, employees want to feel satisfied with their jobs and the opportunities that lie ahead inside a company.
And one of the most important of them all, businesses must increase compensation to make the accounting profession more enticing.
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