Blog

Introduction

Audit firms worldwide are increasingly leveraging offshoring to address talent shortages, cost pressures, and operational scalability. What started as a necessity is now a strategic imperative for firms seeking to sustain audit quality amid workforce constraints.

Global Adoption Trends

• Big Four Firms:
  • Offshore audit hours doubled from 4% to 9% between 2013–2018.
  • By 2023, some U.S. firms offshored 6%–20% of audit hours.
• Mid-tier and Small Firms:
  • 49% of UK mid-tier audit firms already offshore some audit work.
  • 25% of U.S. accounting firms offshore; another 12% plan to start.
• Projected Growth:
  • UK firms predict an additional 71% increase in offshored audit hours over the next three years.

Key Drivers Behind Audit Offshoring

1. Severe Talent Shortages

• Global Talent Gap:
  • Accounting enrollments fell sharply:
    • UK: -56%, US: -61%, Canada: -54%, Australia: -51% (2012–2023).
• Hiring Crisis:
  • 90% of firms globally report hiring and retention challenges.

2. Cost Pressures

• Cost could be a driving factor but not at the cost of quality so firms are preferring quality providers and whilst remaining cost-effective.
• Offshore teams deliver operational efficiency without sacrificing audit quality.

3. Capacity and Scalability Needs

• Offshore models provide firms with on-demand audit capacity, especially critical during peak seasons.

Offshore Audit Work: Nature and Scope

• Primarily low-judgment areas (testing, documentation) but expanding into analytical and areas which require professional judgement i.e. impairment assessment, going concern, audits of financial instruments and IT audit areas.
• Offshore teams are increasingly integrated as full extensions of the core audit engagement teams. All leading firms have been leveraging this model for years and mid-tier and small firms are increasingly interested in doing this but with the right partners who are specialized in audit.

Regulatory Perspectives

• FRC (UK), PCAOB (US), AUASB (Australia):
  • Offshoring accepted, but firms must maintain oversight, audit documentation standards, and data security.
  • PCAOB warns that offshoring some basic tasks may impact junior auditors’ development. However, offshoring is not just for basic tasks, qualified offshore professional can handle even highly complex tasks and project management.
• No evidence that offshoring reduces audit quality, provided supervision is robust.

Future Outlook (2025 and Beyond)

• Offshoring to double or triple in some mid-tier and smaller firms by 2027.
• Firms without offshoring are at risk of losing competitive edge due to talent and cost pressures.
• Audit globalization is underway: cross-border teams are the new normal for sustainable audit delivery.

Final Insight

Offshoring is no longer just an operational workaround.
It’s a strategic enabler for audit firms seeking to survive and thrive in a changing market.
However, success depends on specialization, integration, and rigorous oversight — not merely shifting tasks offshore.

Offshoring is here to stay – and firms that leverage it smartly will lead the future of auditing.