Wheels come off accountancy gravy train
For most of the last three years the only thing holding back the seemingly unstoppable growth in accountancy firm revenues has been a lack of suitable staff. Corporates' appetite for work has shown no signs of diminishing, fuelled by a diet of Sarbox compliance and IFRS conversion.
But there's evidence that that's changing, if today's results by accountancy recruiter Hays are anything to go by.
The company reports net fees in accountancy and finance 6% ahead of last year at £158m. Not bad, you might think. But it doesn't look so good when you bear in mind that last year the division posted an 11% gain.
As the company said this morning: 'The overall performance of accountancy & finance was moderate and fee growth slowed from a combination of both weaker volumes and pricing pressure on the temporary margin as we reached the end of the year.'
And worse, other comments suggested the start of a regional slowdown. 'There was strong growth in the home counties but this was off-set by weak performances elsewhere,' it said.
So is this the beginning of the end? Possibly, though it could simply be that Hays had a flatter year than the market as a whole.
Robert Walters, which reported decent results yesterday, doesn't provide numbers broken down to a UK
But it goes without saying that a boom cannot last forever.
Damian - I don't know why you're on the fence with this one. It's totally predictable. The masking factor is the shortage of qualified leading to an uptick in salary rates. But that won't last either. The profession has raped its clients on the back of compliance. They're getting wise to that wheeze.
Posted by Dennis Howlett | September 6, 2006 3:36 PM
Dennis
Like I say it seems to me the beginning of the end of the boom - all my instincts and plenty of circumstantial evidence (end of the initial Sarbox and IFRS surges etc) say so - but I'd want to see more evidence than the results of one recruitment consultant to call this a definitive turning point. Especially when others suggest that placements are holding up.
Damian
Posted by Damian | September 6, 2006 4:09 PM
I am old enough (43) to remember another boom and bust in the accounting job market.
1988 saw the major accounting firms gunning to "outhire" each other at university recruitment fairs etc.
The stench of the testosterone between the competing firms was sickening!
My firm, KPMG, brought in lorry loads of fresh faced university graduates, the largest number they had ever recruited.
Trouble was, there simply was not enough work to go around to keep all these "eager" young minds active.
The result?
Large numbers of idle graduates sitting around London HQ, playing "primitive" (by today's standards) golf games on the KPMG portable (the size of a small washing machine) pc's.
The writing was on the wall, in the next two years the headcounts were cut ruthlessly.
The same will happen again.
Posted by Ken Frost | September 6, 2006 5:06 PM
Evidence? I can point you to some if you wish. There's some very good work being conducted out of Purdue by Malcolm McLelland which looks at the structural issues around the profession and how that means we have too many qualifieds.
Looked at what's going in on the offshoring markets? Seen how Indian firms are looking to pick up in mid-tier compliance areas and are enjoying quiet but perceptible success?
Seen any of the surveys coming out of the US talking to the issues of perceived value delivered by public accountants and what CFOs want to see happen?
How about the backlash against tax corruption? Impact on Big Four tax departments?
There are remarkable similarities betrween US and UK markets so what I see happening there will wash to these shores.
There are plenty of factors in play right now. Anyone ignoring them hasn't got their eye on the ball but is basking in reflected glory. It doesn't have to be a bust but that would require a very different mindset to that which I'm observing.
Posted by Dennis Howlett | September 7, 2006 10:04 AM
And now PwC confirms on the pages of your own title.
Posted by Dennis Howlett | September 13, 2006 8:28 PM
I've posted the evidence on my blog at ...
http://mmclelland.squarespace.com/journal/
... of what my co-authors and I think are symptoms of (real) problems in the accounting industry. For a lot of reasons the accounting industry will no doubt survive, but I think changes in the real factors driving industry output volume (as opposed to artificial, regulatory factors like Sarbanes-Oxley) will make for some wild times in the accounting industry over the next several years.
Posted by Malcolm McLelland | September 28, 2006 12:23 AM