Accounting Firms Trends Report: Key Insights & Future Outlook

The world of accounting is changing fast, and firms need to keep up to stay competitive. The Accounting Firms Trends Report gathers insights from over 4,100 professionals to reveal the biggest challenges and opportunities in hiring, technology, client engagement, and automation.

Here, explore the key findings and have a clear look at how these trends will shape the future of accounting in the upcoming years. Whether you run a small office or a larger firm, these insights can help you make smarter choices, improve your workflow, and deliver better value to your clients as the industry evolves.

1. Talent shortage is a key barrier to growth

Talent management is identified as the biggest issue, according to the report. Finding skilled professionals has become one of the most significant challenges, and as a result, many firms struggle to meet client requirements and demands. 

Recruiting skilled professionals is becoming increasingly difficult, with many firms claiming that they are unable to take on new clients due to a shortage of qualified staff.

The impact:

According to the report, 35% of respondents stated that finding the right talent is one of the biggest challenges, representing a 21% year-over-year increase from the previous year.

Employee retention is also a growing concern, with almost 88% of respondents finding it to be increasingly challenging. Employee expectations regarding compensation and a better work-life balance, along with the industry’s demand for lucrative offers from competitors, are contributing to this trend. 

Although there has been an uptick in the usage of digital tools and people are increasingly comfortable using them compared to past years, these changes prove challenging for traditional businesses.

2. Trends in Talent Management

There is a shortage of qualified candidates in the job market, causing firms to revisit their hiring strategies.

Over 40% of respondents reported that talent acquisition is challenging, indicating a need to rethink their recruitment policies and job roles. 

Some firms are already relaxing the qualification criteria and looking to explore broader skill sets instead of conventional accounting credentials to overcome the scarcity. Retention trends were better, but only marginally.   

A substantial number of respondents (36%) found it extremely difficult to retain talent, while 12% found it easy. However, firms that were open to remote and flexible work arrangements had better success rates in talent retention.

Solution: To overcome these challenges, firms can consider offering higher salaries, flexible working hours, or a work-from-home option, as well as a better working environment.

While there is no one-size-fits-all solution, most firms will find that they can broadly address these aspects and design a bespoke solution that meets their specific requirements.

3. Technology Adoption and Evolution

Technology plays a crucial role in the industry’s evolution, and its adoption is increasing across the sector. More than 70% of the respondents said their respective firms’ tech adoption would increase over the next two years, and nearly 30% indicated it would increase substantially. 

A meager 8% said their investment in technology may decrease. 35% of the firms even went on to say that they consider themselves early adopters of technology.

Close to 41% thought their pace of technology adoption was average, while only 20% considered themselves cautious. The latter category most likely consists of smaller firms.

About 35.6% of respondents were unanimous in declaring that traditional accounting software is likely to receive the most investment.

Surprisingly, the adoption of collaboration tools at 19.5% and security solutions at 11.1% seemed low, given that cybersecurity and inefficient client communication were identified as major challenges.

Solution: Firms need to be more aware of the challenges and focus on all the issues proportionately rather than concentrating on just a few of them. In this case, they should budget and plan according to the magnitude and urgency of the requirement.

4. Client Collaboration and Engagement 

Though the adoption of digital collaboration tools is high at around 80%, the efficacy of these solutions remains mediocre at best. A sizeable 51.8% of respondents rated their client engagement as inefficient or somewhat efficient, while 6% went on to call it “very inefficient”.

The most logical reason for this is the lack of training and integration of these solutions, rather than the solution itself. Even after easing the pandemic restrictions, virtual interactions have persisted, with firms adopting a hybrid approach. However, the virtual environment and hybrid approach uniquely challenge maintaining effective communication and strong client relationships. 

Solution: Firms must invest in training their people to improve the integration of collaboration tools and maximize virtual and face-to-face communication with clients.

5. Cloud Transformation and Remote Operations

Another major and transformative trend seen in the survey is cloud adoption. The findings of this report suggest that over 50% of respondents rely on a combination of desktop and cloud solutions, and 9% are fully cloud-based. The remaining respondents rely exclusively on desktop-based platforms. 

However, this is likely to change soon, with 38% of respondents planning to switch to cloud-based solutions in the next year and another 36% in the next two years. 

According to the report, many firms have begun reevaluating their needs and questioning their previous belief that they have sufficient cloud capabilities. During last year’s survey, 25% of the firms believed they had enough cloud solutions and tools to meet their requirements.

That number has dropped to 18.5% this year. This indicates a clear shift in awareness about the benefits of cloud solutions. According to a report by Accounting Today, the cloud accounting market is set to reach $11.8 billion by 2026.  

6. Analytics and Business Intelligence Tools

Analytics software has found a place in most accounting operations, and around 70% of accounting firms use one or more analytics tools. 42% said they are using analytics tools extensively. 

Only a small proportion of respondents (6%) reported never using analytics. These are mostly small firms with five or fewer employees. This increase in the use of analytics indicates a gradual shift in accounting from merely providing compliance services to a more consultative approach. 

Firms are investing in tools that ensure compliance and provide analytics and insights, driven by the growing demand for actionable insights through data analytics.

Another trend that has been noticed is the adoption of business intelligence (BI) software by firms. While 30% of respondents said they plan to adopt BI tools soon, over 55% claimed they have already done so.  

This indicates that the industry is focused on data-based insights and trends. This is a direct outcome of client demand for a more proactive and scientific approach toward financial and operational matters.

7. Automation Technologies

Another trend noted in the report is that while almost all firms claim a commitment to automation, only around 51.5% use automation tools regularly, representing a marginal increase over last year.

These tools offer efficiency gains; however, their slow adoption could be attributed to budget constraints and competing investment priorities. 

Automation remains an important aspect for firms to improve productivity and quality of service. Gartner predicts that by 2028, at least 15% of day-to-day business decisions will be made autonomously through Agentic AI. 

Conclusion

The accounting industry is at a crossroads, facing challenges like talent shortages, rapid technology shifts, and exciting opportunities to grow and innovate. By understanding these trends and planning, firms can improve their hiring, embrace new tools, and strengthen client relationships.

Embracing change isn’t just necessary; it’s the key to unlocking new growth and delivering greater value to your clients.

Note: The data mentioned in this blog is sourced from the 2023 State of Accounting Firms Trends Report.