How would you describe the health of the accounting industry in India in terms of customer demand, fee pressure, and staff recruitment and retention?

Customer demand: The Indian Accounting Services Market is expected to grow at an impressive rate during the forecast period. The accounting market in India has had an additional boost, thanks to the Initiatives from the Government’s Make in India, Start-up hubs, Digital India, etc.

The accounting industry in India is broadly divided into audit, taxation, bookkeeping and compliance. With an increase in the number of enterprises, changes in the nature of transactions, implementation of new accounting tools, and revisions in regulations, the demand for accountants and auditors has increased substantially. Digitalization of accounts and the introduction of complex financial instruments in the business has given an additional boost for the accounting industry.

Fee pressure: Fees for services go hand-in-hand with the quality and value addition the recipient gets.

On a general basis, if we can split the whole work into advisory and compliance, the former gets paid higher compared with the simple compliance work. On a similar note, an accountant who is well organized with process and technology can demand better pay compared with the traditional service provider.

At times, unhealthy competition also creates fee pressure, where people race for the assignment quote prices which are just not on par with the efforts to be put in.

One of the major disadvantages could be with the service providers who provide both the accounting and audit services, the latter being in a different legal form but substance over form being one agency.

Employee retention and recruitment: This is both a challenge and an opportunity for service providers. Enterprises should put the effort in to retain the talent, and various elements drive this for any organization, which include: practices at organization, training, team building, the role of technology, flexible work environment and monitory considerations.

The concept of working from home has given tremendous opportunities for accounting firms to recruit people from various locations, and have freelancers working at various levels in the organization. Today, with the evolution of technology, accounting firms have added multiple tools, which allow them to manage accounts and audit virtually. This has also reduced the cost and time of providing services.

Opportunities for Professionals

• With an increase in foreign investment in India and the entry of MNCs having an office in India, accounting professionals have huge opportunities across sectors and domains.
• Accounting professionals with multiple expertise and divisions, accompanied with technology will have the advantage over traditional accounting firms.

Challenges for Professionals

• Small accounting firms and firms with limited exposure will have heavy challenges in getting trained resources/ employees.
• The salary expectation of employees has increased over the period, and this has become a challenge for traditional accounting firms. Firms that can use BOTs, technology-based solutions can sail through these tough challenges.
• Employee retention is a challenge for accounting professionals. As a practice, the employees expect growth in monetary terms and responsibilities. Accounting professionals who have a great funnel for new talents will be performing extraordinarily in these situations.

Are there any service areas where demand has grown over the last 12 months?

With India being a front runner in start-ups, the number of unicorns has substantially increased during the last 12 months. This has led to a demand for the experts in following areas:

• Business structuring
• Family office structuring
• Tax structuring
• Process and control improvements
• Due diligence services etc.

Opportunities for Professionals

• Business advisory: With various new schemes being announced by the Government of India, business consultants have a major role to play in economic growth and business improvements.
• Faceless assessment: During the last 12 months, the Income Tax department has moved to a faceless assessment, this has created new opportunities for professionals.

What are your expectations for the next 12 months - are there any potentially significant developments in the pipeline?

Virtual Digital Asset (VDA): With a new addition for taxing the virtual digital asset, various requirements under accounting, tax treatment and tax structuring will become a major practice line. A virtual digital asset includes any information, code/number/token (not being Indian currency or any foreign currency), generated through cryptographic means or otherwise. Even though the provisions have been set for taxation of VDAs, there are many concerns still facing the professionals regarding accounting, tracking and taxing of VDA. Authorities need to come up with detailed guidance on all these unanswered items.

Data analytics: With the rapid changes in the market, technology, consumer behavior and competition entities depend heavily on an accurate database for decision making. Big data is the new bubble and professionals having expertise in data analysis are crucial for business growth. Data analysis helps entities to resolve various concerns viz. customer identification, supply chain management, increase in profits, reporting etc.

Internal audit: With the changing business strategy, disruptive technologies, changing regulations, and economic transition, there is a huge change in the scope and role of internal audit for any entity. Risk management and mitigation form the backbone of any successful venture and audit professionals play a vital role in business growth.

Part One of the IAB India Country Report is available to read here.