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Tax Tech & Innovation

Tax Professional Report 2023 analysis: Tax tech is more than just a workaround to recruiting challenges

Zach Warren  Manager for Enterprise Content for Technology & Innovation / Thomson Reuters Institute

· 5 minute read

Zach Warren  Manager for Enterprise Content for Technology & Innovation / Thomson Reuters Institute

· 5 minute read

The new "Tax Professional Report 2023" shows that accounting firms' use of technology can have huge benefits beyond simple workarounds

In this year’s 2023 State of the Tax Professionals Report, talent unsurprisingly remains a top priority for many tax & accounting firms. What may be different, however, is where that talent focus is oriented: Recruitment overtook employee development as firms’ top talent priority in 2023, with 12% of all respondents and 22% of respondents at large accounting firms saying they were focused on recruiting this year.

Of course, recruiting new talent can often be easier said than done. Just under half (44%) of all firm respondents said they believe recruitment of new employees with necessary skills and experience would be “highly challenging” in the next year, while an additional 23% said it would be somewhat challenging. Compare that with training and development (21% highly challenging) and employee retention (17% highly challenging), and it’s clear where firms’ worries lie.

You can download a full copy of the 2023 State of the Tax Professionals Report here.

Tax firms have workarounds to the recruitment issue, to be sure. Technology is perhaps chief among them. Respondents from 41% of all firms and 56% of large firms said they would be increasing technology automation to address recruitment challenges, more than any other strategy mentioned. However, while automating tasks can certainly drive efficiency (another top priority in this year’s survey), automation isn’t a panacea for every task the modern tax & accounting firm needs to tackle.

And technology doesn’t just have to be a replacement for recruiting efforts. If done right, technology should augment tax & accounting firm recruiting efforts rather than replace them.

Tying in technology

For example, John Seale, Managing Partner at the Indiana-based midsized accounting firm RBSK Partners, said recently that his firm has gone all-in on purchasing technology, integrating everything from billing to calendaring to internal workflows into a large, interconnected software system. He’s aware that all of this technology isn’t the norm.

“I get a lot of feedback about, you know, my God, do we ever quit buying software?” Seale joked. “And I said, well, as long as it makes sense, makes us more efficient, and provides a better product, then no, we’re just going to keep buying.”

However, there was one area where that tech investment paid dividends that he perhaps didn’t expect. Seale said he wouldn’t lead with technology during hiring interviews, but he would make sure to mention that learning all of these software systems would be part of the job. Rather than balk at the work, however, he found that many of the candidates he most wanted were willing to embrace the career development opportunities that tech could bring.

“I describe to them the process, that it’s going to take them a while to just learn the processes and the software,” Seale explained. “But I say there’s a reason for that: You’ll be the highly efficient professional once you master these skills that you’re not going get somewhere else.”

Indeed, the 2023 State of the Tax Professionals Report mirrors Seale’s findings. Among survey respondents who weren’t in leadership roles in their firms, two drivers of satisfaction yielded particularly large correlations to overall satisfaction, but had overall lower ratings (meaning that they’re important, but respondents felt their firms were not doing them well). One driver of satisfaction may be unsurprising: compensation. But the other may shock some firms in its importance to non-leadership roles: efficiency and automation.

Seale said he also has found that this is an area where many tax & accounting firms fail to face the future. “They hang on to old tech or old processes and they hang on to paper,” he said. “And describe to me someone in the last 10 years who graduated or passed the CPA exam that’s looking for an old process and a paper process. Nobody.”

Respondents from 41% of all firms and 56% of large firms said they would be increasing technology automation to address recruitment challenges, more than any other strategy mentioned.

That’s why RBSK Partners is not only generously providing software to automate the business, but also ensuring employees have the hardware such as multiple monitors, scanners, webcams and other pieces of technology they need. Seale has found that these investments have a direct impact on not only efficiency, but overall employee happiness and productivity. “They’ve got the best of what there is, I think, as far as hardware and software,” he adds. “There’s nothing sacrificed there, and I think that makes for a happy work spot, to know that you’ve got the best that there is.”

Certainly, it’s an increasingly crowded market no matter what type of position for which a firm is hiring. Almost 90% of large accounting firms surveyed said they would be hiring junior, mid-level, and senior tax professionals this year, while roughly half of midsize firms said they will be hiring junior and mid-level professionals. However, more than 60% of respondents said they anticipate difficulty filling senior and mid-level roles, and 42% anticipate difficulty filling junior roles.

To compete in a crowded recruitment market may require different strategies. Seale said he is a proponent of firms getting out of their bubble and trying a new way of thinking, because better tools can lead to better talent and ultimately more business.

“There’s a lot of firms that I think live in a bubble. They’re just a deer in the headlights, like we’re crazy. You’re doing what? Why would you use that software? That stuff, it’s really expensive,” Seale said, admitting to the expense but saying providing employees with the best tools is crucial to the firm’s success. “You want to be a carpenter? You want to buy the best dang tool that you can buy, the best drill, the best this, the best that. Because you’re going be more efficient to serve more clients, be more profitable, and provide more value.”

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