Accounting firms today are at an impasse. The U.S. Bureau of Labor Statistics reported almost 1.5 million jobs in the accounting and auditing sector in 2021, and although the 6 percent job growth in the space projected over the next decade is only slightly higher than overall projections, the industry’s job economy appears to be teetering on a precipice. The industry is very much considering the role of a contingent workforce in accounting firms.
Almost 75 percent of the CPA workforce met the retirement age in 2020, as estimated by the American Institute of Certified Public Accountants (AICPA) – and when the pandemic landed, many of those eligible for retirement indeed opted for the gold watch. At the same time, fewer workers are entering the accounting profession, as the number of CPA exam candidates has dropped from 50,000 in 2010 to just over 32,000 in 2021. Accounting firms, most of them in need of a talent infusion, are facing dwindling options.
Dwindling – but not exhausted. One of the options accounting firms can call upon is the contingent labor market, which many organizations once found themselves forced into considering but are now willingly embracing. In fact, the accounting and auditing space – where workflows fluctuate dramatically based on seasonal cycles – is a hand-in-glove fit for contingent labor. And the best firms are currently building a strategy (or already have one in place) for deploying those contractors in 2023 and beyond.
More Consideration for Contingent Labor
The economic and practical forces at play during the pandemic not only drove many retirement-age employees out of the workforce, but also fueled advances in the development and adoption of technologies and work models best suited to contingent labor. Accounting firms were required to build or refine hiring and staffing infrastructure incorporating remote work, which opened the door to consider a whole new pool of candidates. Organizations suddenly desperate to staff up – especially for the busy months and special projects – now had solutions in place to accommodate independent workers and to access their abilities from anywhere in the world. That sets the stage for a larger role of a contingent workforce in accounting firms in 2023.
Over the next 18 months, two-thirds (67 percent) of accounting firms expect to increase their use of contingent labor, while only 5 percent expect it to decrease, according to projections from MBO Partners. An even higher percentage of corporations (77 percent) expect their use of contractors to increase over the next five years – including 33 percent that believe it will increase substantially. Not surprisingly, the use of contingent labor in the space is expected to grow from its current share of 28 percent to 33 percent in 18 months and a whopping 36 percent in five years.
That means more than one in every three employees in accounting firms will soon be a contract worker. Among that group, expect an overwhelming majority to be skilled contingent professionals. Even now, the accounting and auditing contractor workforce is made up of 82 percent of skilled contingent professionals – a phenomenon driven by both demand and supply.
As more firms come to realize the benefits of a robust contract workforce and seek the flexibility and specialized skills that contractors offer, long-standing stigmas attached to contingent labor are dying and the average employee recognizes contracting for what it is – an opportunity. More employers are seeking prospects to fill expanding rosters of contingent workers, and new technologies and services have transformed contract work into an increasingly attractive option. The end result: a pool of contingent workers that, over the years, has both expanded in size and improved in quality.
Advantages and Disadvantages of Contingent Labor
Old standards related to upward mobility, job security and even professional status once dissuaded many prospects from considering contract work, which limited the number of candidates and often meant the best talent remained tied up in traditional staff roles. The landscape has dramatically changed, however, as employers acknowledge the importance of contingent labor in their workforce both in terms of how they staff and how they compensate those independent workers.
The role of a contingent workforce in accounting firms isn’t simply theoretical. Companies have witnessed time and again business needs that are met by contract workers, as well as some of the hidden benefits a contingent workforce – and hiring agencies that connect employers to those workers – can bring to an organization.
Most notably, contingent labor offers a company flexibility. The ability to staff up or modulate down based on project needs, seasonality and economic factors helps businesses to remain solvent and, when the time is right, to grow. With fewer embedded costs than those associated with full-time staff (such as sick time and benefits) and no commitment to unemployment insurance, contract workers are an excellent, no-hassle resource that can be turned on or shut off as needed.
Independent contractors allow organizations to be more agile. Plucking an expert from a pool of specialized talent to fill a short-term need is a luxury that was once out of reach for most companies, but today’s fully mature contingent labor market and hiring apparatuses now provide access to qualified contractors for all. Contingent laborers have grown more sophisticated over time, too, having gained the experience to pivot from gig to gig, onboard quickly and hit the ground running. A contract workforce can even be used as a kind of pipeline to staff positions, a way to break in, judge and even prepare new talent for possible long-term employment.
What are the challenges associated with contingent labor? Any short-term staffing strategy may lead to churn or turnover that can cost a company proprietary experience and compromise the consistency of work quality. Identifying and bringing aboard specialized contractors with the precise expertise needed can also be difficult for an in-house human resources department. But both of these challenges can be met by working with the right third-party staffing vendor – particularly firms with curated networks and deep connections to your areas of need.
Access to specialized talent, fewer hiring hoops to jump through and quicker turnaround times – they all add up to more efficient workflows and more dynamic responsiveness to business needs. Accounting firms that lean into contingent labor will reap these benefits and more, advantages they can pass on to a growing list of satisfied clients.
Interested in learning more about how contingent labor can help your accounting firm? Contact a PeopleCaddie representative to learn more.