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There’s a major talent crisis in the United States for CPA firms. Roughly 80% of the top 30 Accounting firms have turned to India to help by setting up a full satellite office in India.
In May, the Wall Street Journal reported that more than 300,000 U.S. accountants and auditors left their jobs in the past two years. That’s a 17% percent decline in employed accountants and auditors from 2019.
Retiring Baby Boomers account for part of this exodus, but the U.S. Bureau of Labor Statistics (BLS) reports that both younger accountants and mid-career professionals (between 25 and 54-years old) are also leaving the profession. And the talent pipeline is drying up too. In what the CPA Journal referred to as “a pessimistic outlook that calls for major changes,” enrollment rates in accounting programs at colleges and universities are declining. The decline in undergraduate enrollment from Spring 2020 to Spring 2022 was 9.4%, the largest in 50 years.
But there’s no major revolution in the industry happening, like AI technology taking over the workload - the work is still there, and it is increasing. Job openings for accountants and auditors are projected to grow by 6 percent from 2021 to 2031. Every business needs accounting support particularly in 2023’s economic climate, where companies are focused on operating efficiently and cutting costs wherever they can. Staffed accountants are having to deal with larger workloads as their peers depart the industry, which is only exacerbating the problem. Many experienced accountants are burning out and moving into jobs in finance and technology.
You don’t have to be an accountant to understand the math problem here: there are fewer accountants, but more work.
The Big 4 accounting firms have a significant presence in India today, totaling over 228,000 employees working at 85 office locations across the country. The work being done at these firms isn’t limited to accounting - it spans tech, consulting, accounting and more.
All four accounting firms have announced plans to expand their presence in India - through the growth of both Indian offices to serve Indian clients, and global capacity centers to serve global clients.
In February of this year, PwC India and PwC US announced a new joint venture to hire 30,000 additional employees in India. By setting up new global centers and scaling up the existing ones, the firm hopes to accelerate growth and improve service quality. With 50,000 employees in India already, this will bring the total workforce in the country to 80,000 by 2028.
"Our enhanced collaboration between PwC India and PwC US will further accelerate the growth of our global talent footprint and help deliver greater value to our clients.”
- Tim Ryan, Chair and Senior Partner at PwC US
Deloitte’s global arm in India is called Deloitte US-India (USI), which is an entity of the Deloitte US organization. Separate from Deloitte India (which caters to clients within India), Deloitte USI caters to clients of the US member firm. As of a 2021 workforce report, Deloitte USI had over 70,000 employees.
EY continues to grow their presence in India as well - In April, the firm had reportedly hired 18,000 people in the past 12 months, bringing the total to 38,000 employees across all member firms in India. In addition to building global capacity centers to serve their own clients, EY is also advising organizations on how to build out their own GCC’s - through a team based in India.
KPMG Global Services (KGS) is a strategic global delivery organization that provides Advisory, Tax and Audit services to more than 50 member firms worldwide. The arm was set up in 2008 as a joint venture between KPMG US, KPMG in the UK and KPMG in India. Last fall CEO Yezdi Nagporewalla stated the company's intention to hire around 20,000 employees between KGS and its India practice over the next 3 years.
The Big Four have set a strong precedent for building satellite offices, and other CPA firms are following suit. June15’s market analysis in 2023 revealed that 24 of the top 30 Accounting firms already have a GCC in India to better serve their US clients.
For example:
The most established firms have discovered there are significant resources in India to tap into to address the accounting talent shortage. But for firms to follow this model successfully, it’s important that they understand how it differs from traditional outsourcing models.
American companies have been outsourcing to APAC for decades, but the growth we’re seeing in India right now is something different. Traditional outsourcing involves hiring an external vendor in a low-cost country such as India. These outsourcing companies usually specialize in specific domains - popular examples include bookkeeping, customer support or tech support. In an outsourcing arrangement, the operations of the business are kept completely separate from the parent company - and the parent company is not responsible for hiring, managing, or retaining employees.
But a satellite office (also known as a global capacity center or GCC) operates very differently from traditional outsourcing. A satellite office/GCC is a branch of a parent company situated in a different country. A satellite office is staffed with people the parent company has hired, trained, and managed, and the entire operation of the office is your company’s responsibility. One significant advantage to this is quality control. With greater oversight over staff policies, people management, culture, and business operations, the Indian office can be held to the same standards as the rest of your offices.
CPA firms that decide to build a satellite office in India will bolster their brand reputation by joining the most reputable firms in this journey. And once operations are up and running, firms are able to leverage the global workday for the first time - their new teams in India will be working opposite hours than those in the US. Getting more work done at a faster pace means more annual revenue.
But still, there are a host of challenges to consider.
There are unique complexities to setting up a satellite office in India to be appropriately planned for. Here are some of the most common problems firms face when building an office in India:
These complexities - and more - make setting up shop in India a challenging and time-consuming process. Most CPA firms don’t have the same financial resources, human resources or even local connections that the top 30 firms do to tackle this.
The top CPA firms are finding great success expanding their talent benches and building out their physical presence in India. So much so, that all of the big 4 have shared plans to grow their presence in India in the next 3-5 years. Smaller accounting firms can join this trend and reap the same benefits, even with fewer resources. They just need to know where to start.
As a partner to companies looking to establish their first office in India, June15 Consulting has built a free comprehensive guide for firms to follow. This guide leverages our proven ‘test before invest’ model. The implementation, while somewhat bespoke to each organization, has three common practices:
True to its name, this model allows small firms to assess the viability of their team in India before making substantial investments.
Check out June15 Consulting’s free comprehensive guide to understand how to apply the “test before invest” model. If you’re looking for advice suited to your firm specifically, contact our team for a free consultation call.
Have a question about our services? Talk to us today to find out how an India office can help your organization.
