What’s around the corner? Vipul Sheth predicts the direction of travel for some of the big issues impacting accountancy – and the wider world – in the coming months.
Accountancy consolidators
You only have to take a look at the Accountancy Age list of top firms to see the consolidators – generally those backed by private equity - are shooting up the charts. Growing revenue inorganically though is not necessarily a measure of success; the first wave of consolidators during the noughties all failed to develop synergies, economies of scale, or use their mass to win bigger or more valuable clients.
New practices can grow quickly but then hit scaling issues, as clients demand more time and more complex servicing. Larger practices are built on years of client and people development – but consolidation can be disruptive. I expect to see some of the private equity houses look to sell on and make a good return… how easy that will be is very much up for debate.
Election
We will have an election in the UK this year, and it’s by no means certain that the current incumbents will stay in power. Whatever the case may be, I hope for greater stability and planning in its thinking to encourage growth.
A bugbear of mine has been this government’s lack of planning to encourage entrepreneurs and investors to stay here and invest. There are EU countries ready to snap up the best people through a combination of their tax treatment and both residence- and investment-friendly policies. Can whoever forms the next government drive the economy forwards?
AI
We couldn’t have a ‘2024’ list without mentioning AI. The ‘warm glow’ created by ChatGPT still exists, but now time will tell whether AI can revolutionise how we as citizens live and work.
Certainly, there’s been concern among corporates (and governments) about making information freely available to be absorbed and interpreted into large language models. The next step could be AI platforms placed in ‘data bubbles’, with organisations then linking the platform with their own systems and information to help inform decision-making (as well as automating tasks).
Conversely, software providers are also adapting and embedding AI into their solutions.
Whether these private data bubbles will be effective or not, when information into them is constricted, remains to be seen – but it will be fascinating to find out the next level of AI utilisation in the real world.
Shared services and outsourcing
You can see in Advancetrack’s own growth that firms know they need resource and the recruitment market is difficult and costly. They are looking for someone they can entrust with supporting their practice. Some firms have looked to maintain control by setting up centres abroad – to varying degrees of success.
Expect to see more and more practices look to grasp the resources nettle – which will mean the outsourcing/offshoring offering will become more popular. I hope that, as firms transition towards models that involve greater automation and external resourcing, they stay laser-guided on developing their existing people while keeping a keen eye on what their clients want from them.
It is by no means easy to undertake that task, but resourcing is a means to an end. Without understanding what you want your firm and its people to provide (and to whom), then everything undertaken is done without foundation.
I wish you all the best during what is likely to be another busy and exciting year.
Vipul Sheth is founder and MD of Advancetrack
If you’d like to chat about developing your accountancy practice, please get in touch by clicking here
