Accounting firms are automating away their future partners

Accounting firms have found a reliable way to save money. The problem is where the savings come from: the routine work that has trained every generation of accountants, and that will be needed to produce the next one.

The Xero-commissioned Modern Practice Playbook surveyed 526 senior NZ accounting and bookkeeping professionals and found 78% of practices have tried AI and 49% use it daily. The average practice saves 7 hours a week and $145,000 a year, rising to 10 hours and $200,000 for top performers. And 94% say AI will not cut team numbers in the next 12 months.

That sounds like the ideal outcome. Read further and it gets more complicated.

Headcount holds, the bottom rung goes

The same survey found 61% of practices say AI is already changing how they hire. Some 35% are prioritising soft skills and relationship management over technical training, and 20% are recruiting data analysts and tax technologists instead of traditional graduate accountants. Xero NZ country manager Bridget Snelling says the opportunity is to “be deliberate about where freed capacity goes,” warning that if the time “simply disappears into the working week, the benefit is limited.”

This is not a layoff story. It is a substitution story. Firms keep their numbers steady but stop using reconciliations, transaction coding and first-draft workpapers as the place where 22-year-olds learn the trade, because software now does that work faster. The short-term maths is excellent. The five-year maths is not, because nobody becomes a trusted adviser without first grinding through the ledgers.

The clients are worried too

The people who buy advisory services have noticed. In June, the Mood of the CFO survey found 60% of NZ CFOs agreed that shifting junior accounting roles to AI would hurt junior skill development and, ultimately, the quality of future CFOs. When the customers start fretting about the supplier’s talent pipeline, and their own successors, it is not a fringe concern.

Thin margins explain the appetite

None of this is irrational. NBR’s April report on the profession found the 15 largest firms had shed more than 500 jobs after the 2025 recession, while collective revenue grew only about 4% to more than $2 billion. When growth is that thin, a tool that strips out $145,000 of cost is going to be used to protect margin first and redeploy staff second.

And frankly, the country needs the efficiency. Labour productivity rose just 0.8% in the year to March 2025, with multifactor productivity down 0.9%. Firm-level gains of this size are exactly what NZ has been missing. The answer is not to slow adoption or invite Wellington to regulate it. It is for firm owners to treat training as an investment rather than a by-product of cheap labour.

Every profession is hitting the same wall

Accounting is simply the clearest example. RNZ reported that youth unemployment is nearly three times the wider working-age rate, with Otago’s Paula O’Kane worried about developing future leaders and recruiter Hayley Pickard of Fortitude Group warning of a succession problem in sectors with ageing workforces.

University of Auckland professor Rod McNaughton has cited an International Data Corporation survey in which more than half of NZ employers said they were slowing or stopping entry-level hiring, and nearly nine in ten expected a further slowdown within three years. “Firms need fewer people to handle routine work and more who can operate in complex, less structured environments from day one,” McNaughton said.

That lands in a softening market, with unemployment at 5.6% and underutilisation at 13.8% in the June quarter. Yet financial and insurance services was the fastest-growing industry by filled jobs, up 3.1% or 2,194 jobs, while administrative and support services fell 1.4%. Finance is not shedding people. It is changing which people it wants.

Put the struggle back in on purpose

The optimists have a fair point. In December 2025, The Post noted that three years after generative AI arrived, the profession had not profoundly changed, because AI reaches data and process but not the judgment and trust clients pay for. It also floated a practical fix: use AI to deliberately recreate the early-career struggle rather than skip it.

That is the job for practice leaders now. Take a slice of the $145,000 and spend it on structured training, rotations through real client files and juniors who check the machine’s work rather than just watching it. Firms that do will own the advisory market in 2031. Firms that bank the whole saving will find themselves trying to hire senior advisers who were never trained, from rivals who had the foresight to train them.

Sources

• NZ Herald: AI changes accounting firm hiring, with more focus on soft skills (2026-10-11)
• BusinessDesk: Mood of the CFO survey: CFOs report hitting revenue targets but fear AI could hollow out the finance talent pipeline (2026-06-24)
• Stats NZ: Productivity statistics: 1978-2025 (2026-04-23)
• RNZ: Is AI eliminating the first rung of employment ladder? (2026-09-07)
• University of Auckland: If entry-level jobs are disappearing, how do young people get started? (2026-04-21)
• Stats NZ: Labour market statistics: June 2026 quarter (2026-08-05)
• Stats NZ: Business employment data: June 2026 quarter (2026-09-08)
• The Post: The optimists’ guide to how ‘Neanderthals’ can cope with AI entering our workplaces (2025-12-06)