The tough hiring environment is driving more small businesses to outsource work normally done by a controller, an HR manager or a marketing officer instead of hiring internally.
It's a trend that's creating new opportunities for consulting companies like BST & Co. CPAs. The firm's managing partner, Ron Guzior, said the demand for outsourced work will grow as the labor market continues to tighten, driven by both people leaving the workforce because of the pandemic and the large number of baby boomers expected to retire in the next few years.
"The whole outsourcing industry has the opportunity because of [people retiring] and the labor shortage and it's not going away," Guzior said. "We get calls every week with outsourcing opportunities, not only outsourced accounting through CFO for Hire or outsourced accounting solutions or human resources or the marketing area."
Five years ago, BST started a 100% virtual accounting division that has grown significantly during the pandemic. The Albany accounting firm followed that in 2017 with its acquisition of CFO For Hire. In 2018, the firm acquired an HR consulting practice. And in the last year, it started a strategic marketing line of business, called CMO for Hire, led by Susan Radzyminski.
BST is not alone in seeing its future based in outsourced work.
Many businesses are facing a labor shortage that is likely to continue — and worsen — as more people from the baby boomer generation retire.The pandemic prompted more than 3 million people in their 50s and 60s to retire early, according to an analysis from Miguel Faria e Castro, a senior economist at the Federal Reserve Bank of St. Louis.
By the second quarter of 2021, the labor force participation rate was still 1.6 percentage points below pre-pandemic times, which means about 4.2 million people had left the workforce. Retirees made up about 19.3% of the U.S. population in August 2021. That could become a problem as the U.S. population growth slows and more people move into retirement age.
The trend is prompting more small businesses to look at outsourcing to fulfill needs like accounting, human resources work and other services that were previously fulfilled in-house. And it's creating new opportunities for consulting firms in the Albany area through acquisition or the development of new business lines.
Robert Kind, co-managing partner of Teal, Becker & Chiaramonte — the second-largest accounting firm in the Albany area — said one of the biggest growth areas for the firm is in its CAS Plan Accounting Services.
"There's a little bit of bookkeeping in there. There's a little bit of consulting," Kind told the Business Review last month. "A lot of our clients either can't find, say, a controller-type level, or they're just too small to have a CFO. That's where we feel like we can step in."
Kind said Teal Becker's revenue in this area could grow up to five times in the next couple of years.
"We've been starting to push it and find that clients are very happy with the service and just want more and more of it," he added.
GTM Payroll Services saw the opportunity to attract more clients through its outsourced services when it acquired the Albany-based firm Pinnacle Human Resources in October.
It allows GTM to bring more human resources consulting services to its clients. Guy Maddalone, GTM's founder and CEO, said in the wake of hiring struggles and an increasingly complex legal environment, businesses have started to outsource all or part of their HR services.
"For a client that wants to outsource payroll and HR, we’re the one-stop shop," Maddalone said in an interview with the Business Review in October. "Alongside the trends of human resource management and the difficulties for firms to keep talent with the ever changing regulations and demands, we've become a solution."