The listmasters at INSIDE Public Accounting have released their mildly anticipated 2023 IPA Practice Management Report and should you want specifics on how the 600 firms that participated are doing, you can purchase the full report from IPA at the link above. We’re cheap and lazy so here are the key highlights from this year’s report as generously shared by IPA:
- More than 50% of firms reported double-digit organic growth rates.
- Average non-compliance revenue as a percentage of total net revenue was 43.0% for firms above $50 million.
- Average net income growth was 14.4% for firms above $75 million.
- Outsourcing initiatives were reported by 47% of firms.
- Professional staff turnover averaged 14.4%.
In May, outgoing EY Global CEO Carmine Di Sibio shared with CNBC’s Squawk on the Street that EY went from more than 20 percent attrition to 12 “pretty suddenly.” And in July, the data nerds at Revelio Labs said that for the first time since 2019, the number of exits at Big 4 firms decreased rather than increased. Their data showed about 56,600 people left Big 4 firms in 2022, an increase of 8.3% from the year before. For 2023, around 21,400 people left Big 4 firms for the year through June, a 11.6% decrease from the same period last year. All that to say, the IPA figure checks out.
As for outsourcing, duh. Last year we wondered out loud if firms were really sending 30% of their work offshore, that figure’s feeling a little small knowing almost half of firms surveyed are outsourcing. And the big firms are now working on expanding their footprint in India, investing in operational centers outside of the major metropolitan areas where they’ve been cranking out work for years.
Deloitte, with a workforce of over 100,000 in India, says it will hire 50,000 more staff over three years, and expand its footprint in new towns while KPMG plans to hire over 20,000 over the next three years.
PwC hired close to 12,500 in the fiscal year ended March and expects to hire the same number this year, said Padmaja Alaganandan, the firm’s India chief people officer.
Accounting Today said a few days ago that according to the Rosenberg Survey — yet another state of the profession benchmarking survey or as AT flatteringly calls it: “the industry’s barometer for CPA firm practice management” — the outsourcing number is even higher. “[A]mong firms with over $10 million in revenue, more than 50% are engaging in outsourcing activity, and close to 70% plan to do more outsourcing next year. Of those CPA firms not currently outsourcing, 50% intend to do so next year.”
So yeah. Confirmed.
And as far as revenue and growth are concerned, duh2. Statista says estimated revenue generated by accounting services in the US reached almost $145 billion in 2023, up from roughly $144.2 billion U.S. dollars in 2022. But that’s “accounting services” and not accounting firms’ revenue.” In their 2023 revenue announcements, Deloitte said global revenue was up 14.9% from the year before and EY came in at 9.3%. PwC and KPMG revenue numbers have not yet been released.
Big golf clap all around for firms.
When I was a kid 20 years ago, I loved Legos and K’nex and thought, I should do this forever as an architect or an engineer. My dad talked me out of it – he said that work is being offshored to the Philippines and the likes and that US engineers wouldn’t have a market. So I did the next best STEM as a CPA. Now I do the most boring-ass work for little pay and get to read these articles every day. Still like K’nex though.
Seriously, eff the AICPA and the blind stupidity / corruption / greed they are letting run this industry.
So to sum up the article – the shortage of accountants in the US means nothing to the large firms because they will just hire a few hundred thousand more staff in India while the US Regional Firms go out of business for lack of staff.