There are some major factors to consider when thinking about how the accounting industry will look in a decade’s time; many components are already forcing change, and this shift is showing no signs of stopping.
These days accounting industry has been evolving, along with the globalisation, consolidation & commoditization of companies. These factors are affecting the constantly changing accounting industry.
Like in almost all industries, technology is driving the evolution of the accounting industry. Recently, cloud accounting has enabled business owners to glance at their accounts on the go. In the coming years, in fact, technology shall robustly impact the industry.
Pricing
Because of the advancement of technology and globalisation, everyone will have easy access to systems that are both economical and powerful. Customers will only be required to pay for the services they really use, which means systems used to keep finances in order won’t require significant capital expenditure. Instead, the power will be passed to the users and the accountants who represent them.
The success of online accounting software such as Xero and Quickbooks Online means many traditional accounting services will become commoditised, and the pressure on the pricing for such services will be increased. Many firms now outsource transactional work to nations where labour costs and related resources are lower.
While machine learning and artificial intelligence (AI) may encourage deeper transactional type services, exerting more pressure on how more traditional accounting services are offered, it is believed that this is just the first step in the process as technology improves.
Machine learning and AI (Artificial Intelligence)
The accounting business could benefit greatly from the opportunities that machine learning and artificial intelligence will (and already are) bring. Using these developments, practices will have an economic and efficient means of advising clients about their present and future finances – with greater speed and confidence. The opportunities machine learning brings to the accounting industry have been enormous.
The development of technology over the next decade will not only lower the cost of transactional type processing but will also lower the price of higher level type processing. This means that the bases of competition within accounting may change dramatically.
Social media
It is safe to say that, due to social media and rapidly developing tech, clients’ expectations for superior customer service within the accounting industry may increase. This will likely be the case in all fields and has already started to happen. Customers will expect greater productivity from their practices and will develop a requirement to want this on-demand.
SME market
It will become evident that the rate of industry consolidation will intensify as the pressure on prices rises. This has already become clear in recent years as larger, more established practices enter the SME market.
In most of the developed world, SMEs already make up around 80 per cent of all businesses, as quoted by a major daily.
Technology in the next decade shall reduce these processing costs, thus it is expected that mergers and acquisitions will increase, and some element of consolidation will occur to ensure economies of scale are achieved. This might lead to increased client churn if older practices lack the technology and consequently competitive weapons, to compete against those that do possess.
India, being a technology provider geography to the world, seems to be the best place to have a talent pool coming from for the accounting practices in the transactional processing work. Offshoring in the current scenario should be an effective strategy for acting practices.
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