The U.S. Accountant Shortage: Is Recruiting Globally the Solution?

The U.S. is facing a significant accountant shortage, a decline that has reached a critical point, sparking concerns about the future of financial services and economic stability.

Here are some eye-opening statistics from the U.S market:

• The Wall Street Journal reported that more than 300,000 U.S. accountants and auditors have left their jobs, marking a 17% decline.
• There are 340,000 fewer accountants now than in 2019, leaving a total of 1.6 million in the U.S., according to a 2024 Bloomberg analysis of Bureau of Labor Statistics data .
• AICPA 2021 “Trends Report” reported a 33% drop in first-time CPA exam candidates between 2016 and 2021.
• According to the AICPA , approximately 75% of existing accountants are nearing retirement age.

This drastic decline in the number of accountants in the U.S. can be attributed to several key factors:

1. Mass resignations: A significant number of accountants between the ages of 25 and 34 and mid-career professionals in the 45-to-54 range seek more flexible work options from the long hours of onsite accountancy.
2. Aging workforce: A large portion of current accountants are nearing retirement age.
3. Perception among younger generations: Many young people view accounting as a boring and overly specialized field, leading to declining enrollments in accounting programs.
4. Compensation: Salaries for accountants are often lower compared to other fields such as finance and technology.

The U.S. is addressing the accountant shortage by increasing entry-level salaries as high as $85,000 annually as reported by CNBC . While this may attract more people to the profession, it is not a sustainable long-term solution, leading to a lower return on investment for accounting firms nationwide.

There is, however, a solution that addresses this need for skilled accountants on multiple fronts – recruiting talent globally.

This could be through hiring a single skilled resource, entire offshore teams, or outsourcing accounting requirements.

This gives accounting firms in the U.S. access to a global pool of highly skilled finance experts at a significant cost arbitrage compared to hiring in-house.

While multiple global delivery destinations exist in South Asia, Sri Lanka boasts a distinct and arguably better standing in this domain.

Why Recruit from Sri Lanka?

Cost Arbitrage

The less saturated yet mature Sri Lankan market and the exchange rate difference translate to significantly lower prices compared to other delivery destinations.

However, we never compromise on quality.

For example, outsourcing to Sri Lanka would cost $25,000-$30,000 annually for the same caliber of an accountant in the U.S., resulting in significant cost savings of 60-70% compared to increasing salaries and it offers the flexibility departing accountants seek.

Finance-Focused Education System

Sri Lanka produces a steady pipeline of finance professionals, with a high literacy rate (93%) and computer literacy rate (71%) that ensures a workforce well-equipped for the demands of modern accounting practices.

Over 85,000 graduates in finance and accounting graduate annually, through a combination of state and private universities offering specialized programs.

All 27 of Sri Lanka’s private universities are affiliated with prestigious bodies in the US, UK, and Australia including John Hopkins University US, Monash University Australia, Deakin University Australia, Edith Cowan University Australia, and Staffordshire University UK.

Additionally, the presence of globally recognized institutions the American Institute of Certified Public Accountants (AICPA) & Chartered Institute of Management Accountants (CIMA), The Institute of Certified Public Accountants (CPA) Sri Lanka, The Institute of Chartered Accountants (CA) of Sri Lanka, and the Association of Chartered Certified Accountants (ACCA) provides a well-established framework for completing professional qualifications.

Furthermore, Sri Lanka's education system incorporates STEM elements throughout primary and secondary education.

According to an analysis of the University Grants Commission’s figures by Calcey, undergraduate enrollment in STEM courses at Sri Lankan government universities constitutes 26% of the total student body, surpassing the 24% rate produced by the United States.

This strong finance-focused education system prepares Sri Lankan accountants to excel in all aspects of accounting, giving them an edge in the global market.

Global Recognition for Quality and Expertise

Sri Lanka has carved a niche as a global leader in F&A services. This reputation for excellence is backed by consistent recognition from prestigious organizations.

• Tholons, a leading outsourcing advisor, has designated Sri Lanka a "Global Center of Excellence for Financial Accounting Outsourcing."
• The National Outsourcing Association has thrice awarded Sri Lanka "Offshore Destination of the Year". This triple recognition highlights Sri Lanka's consistent performance as a reliable outsourcing partner.
• Gartner, a global research and advisory firm, included Sri Lanka in its prestigious list of the "30 Leading Locations for Offshore Services," and among the Top 6 in the Asia Pacific.

Furthermore, homegrown IT giants have redefined financial technology on a global scale. Their enterprise solutions, from stock exchange systems to sophisticated cyber security, power the engines of some of the world's most renowned exchanges, including the London Stock Exchange, Borsa Italiana, and the London Metal Exchange.

Cultural Compatibility

Sri Lanka's workforce goes beyond technical skills. Renowned for friendliness, creativity, and adaptability, we excel in client-facing roles. This cultural compatibility bridges the gap between Sri Lankan professionals and Western businesses, ensuring a deep understanding of client needs.

English Proficiency

Sri Lanka has a large pool of English-speaking professionals since English is widely spoken in major cities and is the primary language used in the corporate sector.

Moreover, recent IELTS data (the standardized test for non-native English speakers) indicates that Sri Lanka surpasses many other Asian countries in English language proficiency. Specifically, Sri Lankan candidates consistently achieve higher scores in the Academic exam, ranking among the top seven in Asia.

This proficiency ensures clear communication and seamless collaboration, from day one.?

As an expert in providing global accounting solutions, the CEO of H Connect International shared his insights on Sri Lanka’s potential as an accounting hub. Here’s what he had to say:

"Sri Lanka has long been renowned as a premier hub for talent, distinguished by its unwavering commitment to professional excellence and work ethics. With robust industry connections and global academic partnerships, Sri Lanka produces a substantial number of internationally qualified accountants annually. As the CEO of H Connect International, I firmly believe that Sri Lanka possesses an exceptional opportunity to share this talent globally. To facilitate this, we have meticulously developed operating models designed to assist small, medium, and large companies in establishing their finance functions in Colombo.”

At H Connect International, we have a team of STEM-qualified Accountants with globally recognized certifications like CPA, CIMA, and ACCA, in-depth knowledge of the US market, and proficiency in accounting standards like GAAP (Generally Accepted Accounting Principles) and IFRS (International Financial Reporting Standards).

Reach out to discover how our tailored accounting solutions can address this massive skill gap and drive growth in your accounting practice.