Firms in Singapore hold their own against strong competition
Operating in one of the world's most expensive markets, Singapore's accountancy firms are adapting rapidly to a changing business environment. Despite pressures from larger firms, local firms are reportedly holding their own and even thriving.
Imran Assan, Partner at MGI Worldwide member form MGI Alliance PAC, joins the discussion in the IAB's (International Accounting Bulletin) latest Country Report: Singapore.
Recruitment challenges, salary hikes and rising costs
Larger firms, particularly the Big Four, have significantly impacted the local market by increasing starting salaries by about 20%. This has forced SMEs to follow suit to remain competitive, though it poses a challenge to their ability to attract top talent due to generally lower pay scales.
Operational costs are rising, with elevated real estate prices, a tight labor market, and overall inflation putting the squeeze on accountancy firms. While customer demand remains high, competition is fierce, limiting the ability to pass on increased costs to clients.
Despite these challenges, local firms are implementing innovative strategies to survive and thrive. Government support, such as productivity grants, is helping SMEs improve efficiency and offset some operational challenges.
Recruitment remains a significant challenge for SMEs. Larger firms tend to attract most local graduates, and new work visa rules complicate the hiring of foreign talent. Increased salary requirements for foreign graduates add pressure on local firms.
Auditing Pressures
The demand for audit and accounting services remains strong due to statutory requirements and bank insistence on audits. However, auditing is proving to be a double-edged sword for local firms, as fee pressure doesn’t mean it is necessarily profitable. Imran comments:
“Demand for audit and accounting services continues to be strong, since the statutory requirement for an audit will be there. In other cases, most banks will also insist on an audit, even if the client is not within the statutory threshold. There is downward fee pressure, since businesses are not prepared to pay more for what they perceive to be a statutory or compliance formality rather than seeing the value of an audit.”
Expanding Advisory Services
To diversify income streams, firms are expanding into non-audit services, such as ESG and crypto advisory. Advisory services related to digital transformation and cybersecurity are also in high demand. This shift is helping firms mitigate reliance on audit income and explore new growth areas.
Future Outlook
Despite the challenges, there is optimism for Singapore's accountancy firms. New regulatory requirements and increased demand for sustainability and ESG reporting provide opportunities for growth. The business environment continues to evolve, and it remains to be seen whether local firms will turn to mergers and acquisitions as a strategic response.
To read the full article in the June edition of the IAB, members can click here (login to the MGI Worldwide member portal will be required).
For more information about our contributing member firm MGI Alliance PAC, visit the firm profile page or website.
MGI Worldwide is a top 20 ranked global accounting network and association with over 8,000 professionals, accountants and tax experts in some 400 locations in almost 100 countries around the world.