The IPA 100 gets much of the attention each year, but the other 400 firms in the IPA rankings offer a broader view of how the profession is changing.
In the latest episode of The INSIDE Public Accounting Podcast, IPA Executive Director Chelsea Summers and co-host Rob Brown look beyond the IPA 100 to compare firms across the IPA 200, 300, 400 and 500. Their discussion covers growth, profitability, service mix, leverage, pricing and offshore staffing, with one theme emerging across the tiers: Firms of different sizes are increasingly wrestling with many of the same strategic questions.
“The tiers are converging,” Summers said. “Compliance is still anchoring those smaller firms more than the larger ones. But even the smallest firms in the IPA 500 are building those advisory lines. They’re adjusting and thinking about pricing models, and they’re concentrating on offshore talent at rates that exceed their bigger peers.”
Different Firms, Similar Priorities
The differences between the tiers haven’t disappeared. Smaller firms continue to rely more heavily on tax and assurance, while larger firms generally have more diversified service mixes. Their staffing structures, partner compensation and approaches to pricing also vary.
But those differences can obscure how much firms increasingly have in common.
CAS and other advisory offerings are becoming meaningful business lines outside the IPA 100. Firms are gradually moving beyond traditional hours-times-rate billing. Leverage has increased over time in several tiers. And firms throughout the rankings are finding ways to improve profitability even as growth moderates.
As Brown put it during the episode, they’re playing the “same game, different speeds.”
Offshoring Offers a Clear Example
Offshore staffing provides perhaps the clearest illustration.
Larger firms are still more likely to use offshore FTEs: 72% of IPA 200 firms do so compared with 36.5% of IPA 500 firms. But among firms that have adopted the strategy, reliance on offshore talent actually increases as firm size decreases. Offshore FTEs represent 5.6% of headcount among IPA 200 adopters compared with 9.6% among IPA 500 adopters.
That suggests adoption and intensity are two different stories. Smaller firms may be less likely to use offshore talent, but those that make the move are incorporating it meaningfully into their staffing models.
And across every tier discussed in the episode, most firms already outsourcing or offshoring plan to maintain or expand those strategies next year.
For firm leaders outside the IPA 100, that may be the most useful takeaway from the data. Strategies that once seemed primarily relevant to the profession’s largest firms are increasingly showing up among firms much closer to their own size.
“If you’re running a $15 million firm and you’re not thinking about offshore capacity, alternative pricing or advisory services, your peers in the same tier as you already are,” Summers said.
Listen to the full episode of The INSIDE Public Accounting Podcast for Summers and Brown’s discussion of what the IPA 200 through IPA 500 reveal about where the profession is heading.
