Digital transformation and talent management are key to the growth of small accounting firms

Oct 25, 2018
Accountants working in small- and medium-sized practices (SMPs) are embracing technology to better serve clients and attract and retain top talent, according to 2018 IFAC Global SMP Survey. IFAC (International Federation of Accountants) received more than 6,000 responses from SMPs, representing 150 countries, about their performance in 2018 and marketplace factors most likely to affect them in the future.

The survey found over a quarter of SMPs (28%) plan to allocate more than 10% of practice revenue over the next year to technology investment, reflecting its critical importance in practice management and operations. The most frequent responses to technological advances have been the development of in-house expertise in IT and the adoption and use of cloud options to better serve clients.

"As the first-choice strategic adviser to their clients, firms are recognising the importance of adopting technology to provide insights and expertise and strengthen their role as trusted business partners," said IFAC CEO, Fayez Choudhury. "It is well-known that the majority of SMPs' revenue is generated by traditional compliance services, but there has been an increase and diversification in the provision of advisory and consulting services that are real-time, forward-looking and based on specialised industry or sector knowledge, which is a trend we expect to continue in the future."

Tech-enabled service offerings 

As transactional activities become increasingly automated, firms are also leveraging technology to provide business insights from data analytics as a new service offering. A significant majority (86%) provide business advisory and consulting services, with a majority (51%) predicting a moderate or substantial fee revenue growth over the next 12 months in this service line.

Talent in the digital economy 

Talent remains a top challenge for SMPs. The majority (54%) have difficulty attracting next generation talent, with 66% stating the number one reason is the lack of candidates with the right mix of skills. This highlights the importance of continuing education and the development of new competencies for the digital global economy.

Additionally, firms are implementing talent management initiatives to both attract and retain staff. The most popular initiative is the introduction of flexible working hours or work days. 
Source: International Federation of Accountants.