You must be tired of hearing about the Australian skills shortage in the accounting industry over time, from your daily news stories to social media feeds. Particularly, many Australian accounting firms have found themselves entrenched in this woeful and sticky situation.
Let’s dive into the details of the accountant shortage in the Australian labour market and how Australian accounting firms responded to the situation.
Table of Contents
1. The context of the Australian accountancy labour market where skills shortage exists
A recent 2023 report revealed that 46% of accounting teams were shorted on accountants with 6% being significantly short-handed. Three main ongoing issues in the accountancy profession that significantly tighten the Australian labour market include:
Change of industry that is less stressful with mundane heavy workloads and fewer overtime working hours
Increasing number of accountancy vacancies due to retirement leave, given that a considerable number of Australian accountants are in pension age
Search for a greater work-life balance to have extra time for family, hobbies and some other important things in life
Leave for physical and mental health problems: huge workloads, long hours result in professional and personal burnout
As the nature of work, accounting roles typically involve heavy workloads. Accountants who work in companies with low or slow tech adoption have to spend a lot of time doing manual and repetitive work. A recent survey showed that 56% of accountants confirmed spending too much time completing manual tasks.
Australians were recorded as having the most burnout workers in the world. The high burnout rate of Australian accountants reflects their high level of work stress due to a large number of workloads such as:
Navigating complexities of tax legislation and business tactics
Ensuring tax and accounting compliance, deadlines and accuracy
Managing client expectations
The burden of responsibilities is exhausting accountants in Australia.
From all of the above, it’s no doubt that the Australian skills shortage continues to be a critical issue for accounting firms. The Australian accounting shortage is likely to last 7-10 years.
In response, accounting firms are actively working to attract and retain qualified talent, investing in professional development. They are also attaching special importance to the well-being of accountants.
2. Challenges facing smaller Australian accounting firms
In the context of labour shortage, your accounting firm may expose to substantial hurdles, especially when your firm is relatively small. Below are two notable challenges:
The ability to adopt and adapt accounting software, automation tools effectively to cut down repetitive and manual tasks
The ability to compete with larger firms in retaining and attracting qualified accountants. Candidates tend to opt for employers with more attractive pay and benefits
The primary reason for smaller firms’ struggle against the aforementioned challenges is resource constraints to keep up with technological changes and fight against the skills shortage.
Besides, their limited scale and scope of operations may result in a narrower perspective on industry trends, market dynamics, and emerging opportunities. As a result, smaller firms may find it more difficult to navigate rapidly changing business landscapes, adapt to new technologies, or capitalize on market shifts.
A sustainable solution is in need for smaller firms to respond to the ongoing issues to survive and thrive in the market.
3. Solutions adopted by small to medium-sized accounting firms
Accountant shortage is an issue that most Australian accounting firms are facing and they exploring ways to mitigate it.
Big accounting firms with large resources choose to invest in Tech and recruit talent overseas. They bring foreign accountants to their location based in Australia or expand locations overseas to advantage of the abundant talent pool abroad.
However, such measures are big challenges for smaller firms with limited resources. Below are the three most common ways adopted by small to medium-sized accounting firms to take the edge off the accountant shortage.
3.1. Outsourcing accounting tasks offshore
The solution that is wisely opted for by Australian firms is outsourcing accounting tasks to cheaper countries, technically offshore outsourcing. This is a strategic move for a small accounting firm.
If you’ve heard about or engaged in outsourcing offshore, you must realize its following three key advantages:
An abundant pool of qualified accounting talent
Additionally, outsourcing will reduce non-core tasks and help your dedicated accountants mitigate the work burden. In this way, you can ensure staff well-being and enhance their productivity for important work.
Some Australian accounting businesses like Odyssey expanded their outsourcing division to talent-rich countries such as Vietnam, the Philippines, and India. This offers local accounting firms opportunities to use outsourcing services from Australian-operated firms abroad. These opportunities include cost advantages and high-quality work performance from highly-skilled accountants.
Explore why outsourcing offshore has become one of the 6 Key Drivers for Australian Accounting Firms from 2023 onwards.
Besides the advantages of offshore outsourcing that you want to embrace, risks associated with data privacy – security and communication barriers exist. It’s crucial to research carefully and choose a trusted outsourcing partner.
3.2. Investing in technology
Investing in technology is an efficient way for accounting firms to streamline and reduce significantly time-consuming work. Large firms like the Big 4 invest billions in Tech such as artificial intelligence and data analytics products.
Still, smaller firms have concerns regarding the implementation and adoption of accounting software and automation tools, including:
The integration of technology needs significant resources to automate and digitize manual and mundane tasks. Additionally, you will need time and money for training your staff to adapt to the new process.
Breach of data privacy and security has become a threat considering the number of cyber-attacks and data breaches keeps increasing in Australia.
Generative AI, such as ChatGPT, has been experimented with by accounting firms. However, its implementation remains controversial due to concerns regarding data risks and the quality of work output.
3.3. Hiring temporary staff
In 2022, 23% of firms hired temporary or contract accounting staff to cover the immediate task line needs while anticipating qualified accountants to permanently fill the spots, as disclosed in the recent 2023 report.
Firms are exhausting resources waiting for and obtaining local qualified candidates. Hiring temporary accountants can help accounting firms solve vacant accounting roles in the short term but involves risks. Below are the possible problems facing accounting firms:
Inconsistencies in the work processes and work quality
Costs for training and onboarding the new staff to get into the firm workflow
Inability to fill the positions with local qualified accountants in the expected time, especially when the accountant shortage is significant in Australia
In the context where the accountant shortage is long-lasting in Australia, accounting firms must be more careful when making decisions to maintain sustainability in the work chain.
4. The bottom line
Accountant shortage is a continual situation that requires Australian accounting firms to have sustainable solutions, strategic plans and implementation.
Hiring temporary staff can expose accounting firms to uncertainties regarding work quality and inconsistencies in workflow. Investing in technology and maintaining an adequate number of accountants is recommended to sustain operations and facilitate scalability.
In addition, it’s crucial to keep your staff stay balanced between life and work so they are healthy mentally and physically. That’s how you keep your team strong and productive to deliver the best work quality, satisfy clients and get your firm scaled up efficiently.
Outsourcing accounting is a go-to strategy if your firm is small and has limited resources, just to make sure you count on the right partner with the accounting processes.