Cliff Taylor: A ‘perfect storm’ is creating labour shortages across professional services

Talking to accountants, lawyers and recruiters the same phrase comes up again and again about the current state of the market to attract and retain staff – the “perfect storm.”

Professional services have never been busier, with strong growth in existing client companies and a string of prospective new business from both FDI and new Irish firms.

As with all sectors, the knock-on impact of the war in Ukraine is now an uncertainty – for now, however, the shortage of skilled staff remains key.

Across the sector the story is the same – finding new staff to service business levels and holding on to existing staff are major challenge, due to a combination of factors, some – but not all – relating to the fall-out from Covid-19.

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For qualified accountants and lawyers, meanwhile, particularly with some experience, the market has seldom been hotter.

1. The stats

There is no doubt that the professional services sector is booming. It is measured in the CSO figures under the heading “ professional, scientific and technical activities” which covers lawyers, accountants, and other businesses which sell specialist services including the likes of advertising agencies, architects and companies supplying management, design of scientific consultancy.

Employment in this category has shot up and is now some 22 per cent – or 32,200 employees – above pre-pandemic levels, with the sector employing almost 175,000 people.

Looking at longer term trends, this is more than twice the 84,000 employed in 2000. Earnings in the sector last year were running some 14 per cent ahead of ( depressed ) 2020 levels and 23 per cent up over five years.Indications are of another sharp rise in salaries and overall packages in 2022 – again with the caveat of the unpredictable outcome of the Ukraine crisis on the wider economy.

2. Business trends

The first factor driving the “ perfect storm” is strong business levels from a growing economy and strong inward investment.

“The business pipeline is very strong and companies are hiring to meet increased demand for services across the board.” according to PWC managing partner Feargal O’Rourke.

However while graduate recruitment remains strong – and the company is seeing strong interest from potential college recruits – a range of factors are leading to a fight to retain and attract more experienced talent.

In Grant Thornton, managing partner Michael McAteer says business is strong and the company currently has 200 open roles with plans to recruit another 350 people by the end of the year, including the annual graduate intake.

McAteer says the company is now increasingly looking abroad to fill roles requiring experience across the range of services it provides.The long visa process for non-EU applicants causes delays here, he says.

As well as sheer business volumes, some sectors of the market are benefiting from structural factors, including for example increased compliance requirements in financial services and increased activity related too intellectual property.

The same squeeze is evident in legal services, with strong business volumes but shortages of qualified and experienced professionals.

Richard Martin, managing partner of legal services firm RDJ points to a " confluence of factors" including demand from international firms now entering the Irish market and from accountancy firms entering the legal market.

There is also a movement by lawyers to industry jobs and away from professional practice, driven in part by lifestyle considerations and “where the stresses and pressures of the job are quite different from those in private practice.”

O’Rourke and McAteer confirm that this competition from newly-arrived FDI firms is a factor in the accountancy market, too,with O’Rourke identifying recruitment by some financial firms arriving here as a result of Brexit as part of this story.

Trayc Keevans, global FDI director at recruiters Morgan McKinley, says that major international manufacturing and service firms have been building up their in house capabilities, particularly in areas like tax, internal audit and also roles in HR and payroll, where some are now taking in roles previously outsourced. This is increasing pressure in the market for skilled staff.

“There is an increased demand in industry for experience and people who understand numbers and are not just reporting them,” she said.

In turn this is all leading to more choice for accountants as they climb the ladder and more options within professional practices and industry, with even part-qualified accountants now in demand.

She confirms that a lot of firms are now looking overseas, either for returning Irish emigrants or non nationals to fill roles and from a range of markets including Europe, Australia, South Africa, the Middle East, India and Pakistan.

Overseas recruitment can be more difficult in legal services, given Ireland’s common law regime.

However some legal firms are looking internationally and sources say some major players are now in some cases getting work done for Irish clients in their own overseas offices.

3. Employee preferences

Across the board, leaders in the professional service firms see the impact of the pandemic on employee preferences. This is also a factor in the labour shortages affecting the sector.

“The pandemic has led a lot of people to figure out what exactly it is that they want from their working life,” according to Martin from RDJ. “Whether it’s the place of work, the type of work or the hours of work, the lockdowns and forced work from home for such long periods has led to a reappraisal by many people of their lifestyle.”

In some cases this has led people to trade off potentially lower long-term earnings for more predictable hours in jobs outside professional services, he believes.

O’Rourke of PWC calls it the “ great consideration”. Ireland has not seen the “great resignation”, he believes, but many employees are considering their options in the wake of the pandemic.

For example, this has seen some younger employees leave to travel for a period, an option closed off during the pandemic.

In Grant Thornton, managing partner Michael McAteer sees a similar trend, with “pent up demand” for younger staff to travel. “ They are heading off to see the world,” he said “ and deciding to take a year or two out of the workforce.”

In some cases more experienced staff are taking other opportunities, though there does not appear to have been the large swathes of resignations from the workforce seen in some other countries.

4. The way forward

Industry leaders believe some of the pressures may ease, but for now the fight for talent will remain a key factor.

In the longer term McAteer argues that a rethink is needed on attracting people into the professions, going back to the Leaving Cert accounting syllabus, which as not changed fundamentally in many years and the number of accountants being trained.

All agree that flexible working, married to the demands of the business, will be vital in attracting and retaining staff.

However no one model has yet appeared either internationally or in Ireland for “ hybrid” working, with much discussion on how this will plan out in terms of time in and out of the office and firms taking different approaches for now in how they deal with the issue.

All agree that there is no going back to the old ways and that flexibility is now a key battleground in the war for talent.

“One of the real long tails of Covid is the change in the way people want to work,” according to Martin of RDJ. “There’s a demand for far greater flexibility in relation to hours and place of work. There is unprecedented movement in the labour market where those firms that offer real choice and flexibility will win out in the talent war, at least in the short term.”

However he adds that care is needed as workplaces are important for learning and collaboration and “ are places where “ ideas and innovation are born”.

Other senior figures in professional services point to the decisions needed on when and how people work in the office in future and whether they come in a few days a week, or more for specific “ purposes. “ All agree this will take some time to work out.

And of course money and prospects remains vital, too. Keevans or Morgan McKinley said the pressure is now on professional services firms to outline career paths for people, in some cases promote them more quickly and, as well as paying them more than in the past, offering better packages in areas like pensions and bonuses. While some things change in the new world or work, some things remain the same .