The role of contingent labor in accounting firms set to expand in 2023
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% job growth in the space projected over the next decade is only slightly higher than overall job growth projections, the industry’s job economy appears to be teetering on a precipice.
Almost 75% of the CPA workforce met the retirement age in 2020, as estimated by the American Institute of CPAs, 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 rejected but have now found themselves forced into considering, and increasingly, are 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 securing independent contractors to assist during the 2023 busy season 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 nonlocal candidates. Organizations suddenly desperate to staff up — especially for busy season and other client engagements where they did not have the needed bench resources — now had the ability to access independent talent from anywhere in the world.
Over the next 18 months, two-thirds (67%) of accounting firms expect to increase their use of contingent labor, while only 5% expect it to decrease, according to projections from MBO Partners. An even higher percentage of corporations (77%) expect their use of contractors to increase over the next five years — including 33% 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% to 33% in 18 months and a whopping 36% 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% of skilled contingent workers — 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 candidates to meet expanding demand for contingent workers, and new technologies and services are helping to transform contract work into an increasingly attractive option. The end result: a pool of contingent professionals that, over the years, has both expanded in size and improved in quality.
Advantages and disadvantages of contingent labor
Old concerns 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. That landscape has dramatically changed, however, as the emergence of the gig economy has compelled employers to acknowledge the importance of contingent labor in their workforce both in terms of how they staff and how they compensate those independent workers.
The advantages of contingent labor aren’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 more 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 vacation, 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 solutions now provide access to qualified contractors for all. Contingent workers 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 contractor specialists with the precise expertise needed can also be difficult for an in-house human resources department that is primarily focused on filling their company’s open permanent requisitions. But both of these challenges can be met by working with the right third-party contingent labor partner — particularly firms with curated networks and quick connections to deep talent pools within 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.
