AI is coming for Accounting. India is uniquely positioned to lead.

Accounting may be the least glamorous part of a business—but it’s also the most ripe for disruption. With a $180B global wage pool and an aging workforce, the pressure to automate has never been higher. And India may be where the breakthrough happens first.

Over the last few years, India has become the fastest-growing hub for U.S.-accredited CPAs. Thanks to remote testing access and the rise of global capability centers (GCCs), thousands of Indian accountants now work inside the finance stacks of Fortune 500 companies. They're fluent in U.S. GAAP, wired into legacy ERP workflows—and acutely aware of the inefficiencies AI can eliminate.

More importantly, Indian founders and teams are building with this firsthand insight. They see the messy backend of accounting not as a problem to outsource, but as a system to re-architect.

This blog explores why accounting is AI’s next big frontier—and why India might build the global leader.

At Accel, we interviewed more than 20 US-based CFOs at mid-market companies across industries such as manufacturing, financial services, consumer goods, oil & gas, and telecom. We were struck by how consistent their challenges were:

Outdated legacy systems...

…forced them into manual workflows that were not only inefficient…

…but also delayed their monthly close process…

Creating a ripple effect that hampered timely financial reporting and decision-making.

The staffing problem goes deeper: high dependency on accounting teams on one side, shrinking and aging accounting workforce on the other

Accounting spend of a US-based company typically lies between 5-15% of revenue (this includes software, staffing and external audit/advisory fees). Strikingly, 80-90% of this spend is attributed to personnel, i.e., accounting teams.

Given this backdrop of heavy and costly dependency on accountants, what is brewing in the foreground is a shrinking and aging accounting workforce in the US. According to the Wall Street Journal, more than 300,000 U.S. accountants and auditors left their jobs between 2020 to 2022, a decline of 17%. The American Institute of Certified Public Accountants (AICPA) has stated that roughly 75% of its members are at retirement age (as of 2020) and will likely retire in the next 15 years. Meanwhile, the number of fresh accountant graduates entering the workforce has declined 18% since 2016.

This calls for the need to automate accounting more than ever.

Agentic AI can automate redundant tasks and augment judgement based workflows

• Bookkeeping & financial reporting accounts for 40% headcount, is the most fundamental workflow and also the most starved for AI automation. It can hugely benefit from AI-driven data collection and classification to speed up the reconciliation process.
• FP&A (Financial planning and analysis) becomes increasingly important as the company scales. Here AI can speed up report generation, summarize key performance data and help dig deeper into issues using advanced reasoning. Treasury & cash management becomes critical to industries with high liquidity requirements like banking, manufacturing, retail, etc. AI can track transaction data and provide predictive insights on working capital management.
• Taxes and auditing are both jurisdiction specific and are usually outsourced. AI can help track missing information, verify data against codes and standards and flag anomalies.
• Payroll & compliance tends to get outsourced early on. AI can help triangulate employee pay and benefit data and detect irregularities.
• Procure-to-pay is vital to industries with complex supply chains and large inventories like manufacturing, retail and construction. AI can help keep contracts up to date and provide predictive signals for inventory management.
• Order to cash is essential in industries with high sales volumes like consumer goods, SaaS, etc. AI can actively monitor customer credit limit and escalate cases that defy rules.

Many early stage start-ups have emerged in this space, however category leaders are yet to be created

2024 alone saw $700M worth of total funding going into Accounting AI. We see new names cropping up every week and the list continues to grow!

Despite the high count, we haven’t seen a breakthrough AI outcome in this space yet. Take bookkeeping for example, the existing market is crowded with service heavy, micro-SMB focused players on one side and basic check-list point solutions on the other. In another observation, players trying to solve for accounting firms find the market highly consolidated among the top 100 firms with long sales cycle.

Human in the loop approach will be crucial to validate AI output

Accounting is a high accuracy function with extremely low tolerance for mistakes. Our hypothesis is that a balanced approach is essential: an AI-first product to automate 90% of the grunt work with a human Certified Professional Accountant (CPA) in the loop to look at the 10% edge cases and give a final sign-off. Given the reluctance of companies to completely replace existing ERPs, the ideal solution should sit on top of the ERP while seamlessly integrating with the remaining accounting stack (be it CRM, billing & invoicing platforms, expense management platforms, etc.).

Needless to say, if you’re building in this space (or have an different point of view!), we’d love to chat. You can reach us at [email protected] and [email protected].

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