Ed. note: Please welcome Chris Hooper, partner at Accodex Partners and accounting futurist, to the GC scrum.
Last week I read Caleb's post about the murky future of the accounting profession, and I reached out to him immediately. You see, I am in the business of predicting the future of the accounting profession. Or at least that’s what my LinkedIn says, it makes it easier to explain what an accounting futurist actually does.
I recently penned a paper, about the future of the accounting profession as part of my MBA studies. Rather than bore you with the 10,000 word saga, I’ll give you the cliff notes.
There are forces at play in the industry (and the broader economy) that are going to have a profound impact on the profession. The blending of these forces comprise of: Globalization, Client Expectations, Technology and Labor Dynamics. They converge into a phenomena I am calling the Accountapocalypse.
Let’s take a look at these forces in isolation:
Globalization: The accounting profession will be impacted on a supply and demand side. On the supply side, there is an abundance of low-cost skilled accountants in countries like India, Philippines and Vietnam and they want your jobs! You can hire a CPA with 5 years experience for about $10,000 a year. The proliferation of cloud technology means that it is easier for smaller firms to run back offices in these countries. On the demand side, the continued adoption of IFRS will see firms able to service clients overseas for much of the accounting value chain.
Client Expectations: Clients are demanding more business improvement advice, not just a tax return and a set of accounts. As the cost of changing accountants falls, it’s easier for clients to jump to the firms that provide these services. In addition to the need for more advice, clients want more face time with their accountants, and because of the frightening price competition in the compliance space, they’re not willing to pay much more for this level of service.
Labor Dynamics: Beyond offshoring, there’s another shift in the labor force dynamic in accounting: millennials. They are looking for meaningful work and work-life integration. Pair this with falling barriers to entry to start their own firms, many would sooner pack up and start their own firms than buy into a firm that doesn’t offer them the right work environment.
Technology: The cloud was the catalyst for much of the change we’re seeing in other areas. It meant that the barriers to globalization fell, that clients were getting real time accounting information and that millennials could realistically work from home (or overseas). The cloud is just the tip of the iceberg. As this technology evolves we will see more automation of the value chain, and ultimately see artificial intelligence take care of the rest.
With all of these changes, firms need to ask themselves, “What does this mean for our business?” And accountants need to ask, “What does this mean for me?”
As Caleb put it in his last blog, “It’s not really that scary. Everything will be fine. Just different! Sorta like when the dinosaurs went extinct.” That’s the Accountapocalypse. Prepare yourselves.