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Global staffing, private equity and advisory expansion are becoming part of the operating model at many of the profession’s largest firms.

In the final episode of our series, INSIDE the IPA 500, Chelsea Summers and Rob Brown examine how deeply these strategies run through the IPA 100. They explore why offshoring does not produce a simple productivity story, compare PE-backed and independent firms beyond their identical organic growth rates and break down the economics of advisory-dominant firms.

The data reveals different choices around partner compensation, reinvestment, pricing, talent and scale.

Follow, rate and review the podcast and visit INSIDEPublicAccounting.com for more IPA 500 coverage. View the complete 2026 IPA 500 rankings and learn more about IPA’s benchmarking and analysis at insidepublicaccounting.com.

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Global staffing, outside capital, and advisor expansion, those aren't experiments. They are becoming infrastructure inside of a lot of firms. So the differences among those firms aren't whether they've adopted those things. It's are they deliberately executing on it? Are they leading their own strategy or letting their strategy lead them?

Welcome back to the INSIDE Public Accounting Podcast, where we turn the profession's most important data into insights that firm leaders can actually use. I'm Rob Brown

I'm Chelsea Summers, Executive Director of INSIDE Public Accounting. Before we get started today, we'd love to invite you to something special that we're doing. On September 24th at 12:30 p.m. Eastern, Rob and I are taking the INSIDE Public Accounting Podcast live for our first ever Q&A session. We will answer your questions, revisit some of the conversations we've had from the season, and share some stories behind the scenes. We'd love to have you join us. Just use the YouTube link in today's show notes and click notify me to get a reminder when we go live.

And if there's something you've been hoping we discuss, leave us a question in the comments or shoot me a message and we will answer it live.

That's gonna be edgy, Chelsea, because we won't know exactly what's coming up. But we do get questions from you a lot and we're hoping you'll engage with us on that one. And you know what? If a million turn up, that's a great problem. And if five turn up, we'll play with whoever shows and that will be the party. And Chelsea, we spent the last few episodes going deep on the 2026 IPA 500. We walked through the rankings, the debuts, the exits, the five year trends on the IPA 500 and the tiers below it. That's been an exciting series.

Yeah, and today we're picking up where those previous episodes left off. The August IPA Insights report has a few articles that we haven't touched yet, and there's some interesting data that we haven't been able to cover. So we're going to talk about how deep offshoring actually runs at the top of the profession, what is separating the PE backed firms from the independent ones once you get past that the growth headline numbers that we already talked about, and a group of firms that are quietly rewriting the economics of public accounting.

Yeah, and there's such great data. I've started a a sister show, if you like, called Backed, which is a YouTube only play looking at capital control, private equity, independence in the accounting sector. And you are our strategic data partners. So we're we're really proudly leaning into the great intel that IPA produces. so for this one, Chelsea, let's start with staffing, because we touched on offshore in briefly when we covered the IPA 200 and 300, but we haven't really sat with the top 100 on this.

Yeah, and the I the IPA 100 numbers are a bit of a different animal. So 86% of IPA 100 firms now employ offshore FTEs. That's up from 83% last year. And at those firms that have those offshore staff, they make up 8.2% of the total headcount, which is up over a percent from last year.

Yeah, I've been interviewing some people in very big top fifty firms even and asking them what their headcount is and they're saying to Do you want the headcount including offshore or just staff that are based here? So it is a it it's meaningfully higher than what you told us about the 200 and 300 tiers a couple of episodes back.

Yeah, it is. So we said that offshore staff were about 5.6% of headcount in the 200 and 7.7 into the IPA 300. So that pattern holds kind of on the way up. The largest firms aren't just more likely to offshore, they offshore at a greater depth relative to their size. And among the top 25 firms specifically, 93% have offshore staff averaging 11.6% of total headcount.

And you said full time employees. So these are significant hires adding to the headcount. And they need it, Chelsea. We know how fast these firms are growing. They're scaling rapidly, they're acquiring rapidly. And and it seems with these stats that size and depth are moving together.

Yeah, consistently. And there's I think a structural question, which is whether that firms are renting that capacity or building it themselves.

So have you got the splits?

I have the data on that.

I knew you would.

About seven in ten firms rely on third party providers. So that's the dominant model because it takes less capital, it carries less risk. But some firms have started to build their own offshore operations, their own subsidiaries or capability centers. And those tend to be the largest firms on the list. That's really a different level of commitment. It's the difference between renting an apartment or buying the building.

And you mentioned firms are doing it themselves. I did an episode on Backed, which will come out soon, with an outfit called Great Global. And that's an amalgamation of eight firms that got together to pull their capability and their spend with offshoring outsourcing, even buying in tech. So it it's firms amalgamating and pulling the resources. So there's definitely some shifts here. And it's more acceptable now, isn't it, to talk about offshoring and outsourcing. It used to have a stigma back in the day, right?

Yes, it used to have a stigma, but now it's almost, you know, the barrier to entry for firms. Like nearly all of the firms are doing something.

It's proven for sure. So beyond staffing, there's also a straight outsourcing of specific work.

Yeah, and that's a separate number that we track. 59% of the IPA 100 firms outsource tax returns during the year. So they send out an average of just over two thousand returns per firm.

That's a wall. And and the part that I remember flagging when we first looked at this data together, y you'd expect offshoring to show up as a a clean productivity win, but it actually doesn't.

Yeah, not cleanly. So firms with offshore staff average lower revenue per FTE. So 242,000 versus 255,000 for firms without offshore staff. They also report higher personnel costs as a percentage of revenue and higher professional staff turnover.

Well that sounds like a red flag on the face of it, but maybe it isn't.

Yeah, so I think first offshore FTEs count fully in the headcount denominator while typically billing at lower rates. So it drags down that revenue per FTE without necessarily hurting that bottom line. Also, firm size does a lot of work in that comparison since the largest firms both offshore the most staff and they also run different cross structures than those smaller firms.

And well, you're brilliant, Chelsea. I I always feel comfortable asking you your actual read on this because you get behind the numbers. What is this telling us?

So I think the firms that are facing the most acute capacity and turnover pressure are the ones that are leaning hardest into that offshore and outsourcing staffing. So it's not necessarily efficiency just to be more efficient. It's a response to a talent problem. And that seems to really line up with what firms are telling us that recruiting, retention, and staff development show up among the top three challenges more than really any other theme other than growth.

Is there any sign of this slowing down? It seems to be only moving in one direction.

It does. So 70% of firms plan to increase outsourcing and offshoring this year, and only three percent plan to pull back. Among the top twenty-five firms, every single firm that answered plans to increase. So for every firm retreating from the strategy, 27 are expanding it.

That is pretty much all my traffic. That's as close to consensus as you'll find anywhere in this profession.

It is and it has crossed all the way from experiment to an infrastructure inside of the firms.

We're having a lot of side conversations about the talent pipeline a few years ago. We were talking about it being a real problem. But AI seems to have solved some of it. And offshore and outsourcing seems to have solved another part of the puzzle. Did you go along with that?

Yeah, I think that that's exactly right. And, you know, a lot of the conversations I'm having with firm leaders as well is, you know, it was a panic. It was, my gosh, we need to fill every seat. And now firms don't feel that pressure and really are waiting for the right hires for what they're trying to build because the technology and the offshore staff have allowed them to have a little bit of breathing room. In accounting, visibility is everything. Yet many firms still struggle with payment status and cash flow hurdles. Bill provides better visibility.

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Now, before we move on to the next topic, I I want to make sure everyone listening knows that this report goes a lot deeper than what we can cover in all of these episodes combined. So we get the highlights and a few of the nuances behind it. But your full August 2026 IPA insights report. This includes the complete IPA 100 through 500 rankings, the five year trends and all that data tier by tier. You've got association, affiliation breakdowns there, and many other deep dives into the data. It's a phenomenal piece of work. So

If you're watching listening to this and you want the full data set to benchmark your own firm, they tell us, Chelsea, don't they, that this report informs their strategic decisions and directions. And people can find details on how to get their copy insidepublicaccounting.com. It is a valuable document, right?

Yeah, it's worth having next to you if you're trying to see where your firm sits in the rankings and how you stack up.

Yeah, definitely. So let's get back to private equity PE, the juggernaut that is, because a couple of episodes ago you gave us the headline number that struck me because private equity backed firms and independence posted identical organic growth. That really surprised me, seven percent each. And all the difference in total growth came from deal volume. Talk us through that.

Yeah, today I wanna go a little bit past that headline into what's happening operationally and on the people side, 'cause I think there are differences outside of that. Organic growth is the same.

So let's start with money, Chelsea, since that's what the partners care about the most.

Yeah, so given all the growth and the deal activity, you just see I would assume that PE backed firm partners take home more. But on average, they don't. So equity partner compensation at the non-PE or independent firms averages 902,000 versus 764 at PE backed firms. So that's a nearly $140,000 gap.

That is a big difference. what's the trade that those partners are actually making?

Yeah, so less cash today in exchange for equity value and the possibility of some kind of future liquidity event. So the data can't tell us where that whether the trade is going to pay off in the long run, but it tells us that this year's paycheck is smaller for those firms. And that connects back to what we said before about reinvestment in those PE backed firms. So independent firms distribute 96.5% of their net income to their partner group, whereas PE backed firms distribute

about two thirds, sixty six percent, and they keep the rest in the business.

to re-implant start. It's kind of a deferred gratification, but we're starting to see now the second cycles of private equity moving in. And so hopefully these payoffs will come soon for these people that are waiting. Where does the PE model actually pull ahead then?

Operating discipline. So realization at the PE backed firms is 89% versus 83% at independent firms. And net income as a percentage of revenue is higher 27% versus 24.7%. Utilization also runs higher across almost every experience level. And PE firms are further along and moving away from the billable hour.

For those PE backed firms, forty eight point three percent of revenue is coming from that traditional charge hours times rate billing model compared to fifty six point six percent at the traditional firms.

Okay, so it's definitely showing up there. And I'm guessing the offshooring numbers we talked about also appear here.

Yeah, PE backed firms average nine point one percent of staff as offshore against four point nine at non-PE backed firms. And they outsource thirty six hundred tax returns compared to thirteen hundred and seventy-five tax returns. So roughly five times the offshore staff and nearly three times the outsourced returns.

Yeah, the private equity model seems more robust. As much as I talk to great independent firms that are truly committed to their stance and not taking external capital, is there anywhere, Chelsea, where the PE model actually looks weaker?

So PE backed firms on average collect receivables a little bit more slowly. Nearly 28% of accounts receivable are over 90 days versus 22% at traditional firms. And days of sales outstanding runs 55 versus 49 days. So for a model that really talks about operational rigor, that's a weak spot and could be made worse by all the acquisition activities during that growth.

Yeah, combining tech stacks, different people holding different relationships with different clients, not perhaps the intimacy with clients that you might get with a strong independent firm. May a lot of reasons there, but that's really interesting that they're slower to collect. What about the talent side? You you're big on talent, you talk a lot about it. So hiring turnover or churners we call it here in this part of the world, who's actually running these firms?

so PE firms are paying professional staff more at every experience level. So there's professional average professional staff compensation is 126,000 on average versus 114,000. They're also promoting much more aggressively. So 15 new equity partners were admitted at PE firms during the year versus just three at those non PE backed firms. So although some of that may do maybe due to the fact that they are doing more acquisitions and growing quicker.

No. It sounds like there might be a but here.

they're losing more people while they're doing it. So professional staff turnover at PE backed firms is 16.5% versus 13.1. So that's a I think a structural marker that we can flag. Fourteen point six percent of equity partners at PE backed firms are not licensed CPAs compared to nine point eight at traditional firms. there's so there I think at those firms there's a broader definition of ownership than the profession has historically used.

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That speaks to a trend we have been seeing in the move from traditional partnership models and a managing partner to the C suite and bringing in non CPAs to run a firm. So yeah, very enlightening. So if you had to sum up the PE versus independent debate and we don't we hold no editorial stance on what is good and what isn't, Chelsea, we just report that it seems we've gone past that headline number, but tell us the real story.

So we don't pick favorites, but and I don't think the data is showing that one model is is better than the other, beating the other, but it's two, you know, diverging businesses that happen to share a profession. So traditional firms remain highly profitable with strong current partner economics, where PE backed firms are building that retain capital and scale through acquisition, admitting partners faster, tending to run tighter operations.

And they're asking their people to bet that the equity will be worth the pay cuts and the you know, downtime and receivables later on.

I wonder we haven't got stats to prove it, but I wonder what the the shift, the movement and labor is between independent and PE backed firms one way or the other to show how people are sitting with the new cultures, the new regimes as things move around. But that's for another conversation. Chelsea, let's move to the piece of this report that we haven't really touched on yet. It's advisory dominant firms. You've been sitting with this for a while looking at the numbers.

Yeah, there's been so much talk about advisory focus that I wanted to dig into those firms who really lean into their advisory practice. So these firms are generating more than sixty percent of their revenue from advisory services, which is anything outside of tax compliance or audit work. And they look different than the rest of the IPA 100. They are really becoming a fundamentally different kind of business.

I just want to repeat that. 60% of their revenue from advisory services rather than compliance work. That is a standout statistic. So start for us with the book of business.

Yeah, so at a typical IPA 100 firm, assurance and tax compliance still is carrying the load, 25.8% and 31.7% for their assurance and tax work. But at advisory dominant firms, those services drop to 12.4% and 11.3%. So what's filling that gap is a more diversified portfolio of services. There's non-compliance tax work, tax planning, specialty tax services.

IT consulting, investment advisory, M&A advisory, business valuation, et cetera, et cetera.

There's so many different branches of advisory now. I've heard about Cybersec and AI advisory and all of M&A advisory, as you say. So it really is ballooning. And we've talked about the downward pressure on compliance fees and accounting firms are feeling the squeeze. How how does all this show up in profitability?

So those advisory dominant firms generate $152 in net revenue per work hour compared to $130 for the IPA 100 overall. So net income per work hours $42 versus $33. So that's a 26% premium.

That is quite a lift. Does the same organic versus acquisition pattern that we talked about all season, does that show up here as well?

It it's very consistent. So those advisory dominant firms grew net revenue 25.2% versus 12.8 for the IPA 100, but organic growth is nearly identical, 7.3 versus 7. So again, the difference is in that deal activity. These firms average three point two mergers during the year compared to less than two for the IPA 100.

I'm guessing the private equity capital shows up heavily in this group.

For almost half. So 46% of those advisory dominant firms are PE backed compared to 29% of the IPA 100 overall. So it's a mutually reinforcing relationship. PE investors want that recurring high margin revenue that advisory services generate. And then that PE capital funds the acquisitions that push that advisory revenue even higher.

Feels like a snowball going down the hill and and collecting and collecting. What's happening with pricing at these firms, Chelsea? You've become somewhat of a pricing expert of late.

I have. so the billable hour is losing its grip very quickly at those advisory dominant firms.

Yeah.

for the typical IPA 100 firm, it's 54.2% of revenue is coming from that charge hour based pricing model. But at advisory dominant firms, that's down to 44.8%. So it's it's essentially tied with value pricing and fixed fee pricing. So these firms have

built revenue streams that really aren't existing elsewhere. So they have things like success fees that make up almost five percent of their revenue versus 0.2% for the other IPA 100 firms. they get fees on assets under management at 4.6% versus 2.2% for the rest of the IPA 100.

And I would imagine this knocks on to how they pay their people.

It yeah, it does and at every level. so the average professional staff compensation is 135,000 at advisory dominant firms versus 117,000 for the IPA 100. So the composition of that workforce also looks a little different. Paraprofessionals and specialists make up 14.6% of total personnel at advisory dominant firms versus just 6% at the IPA 100.

Only about a third of client serving professionals hold a CPA license at these firms compared to forty percent of the typical IPA 100 firm.

You just reminded me, Chelsea, of a comment I'm hearing more and more. That this INSIDE Public Accounting podcast is growing really fast. One of the fastest growing accounting shows in the world. And people that listen to it say to me, I can never listen to your show at double speed or one and a half speed because the stats and the numbers from Chelsea come thick and fast. And just what you say in a couple of sentences, you really need to slow it down and think about how it applies. And and that's a compliment because there's no fluff and fill here. So

As always, Chelsea, we like to leave the audience here and and there are a lot of senior people making decisions. We like to leave them with some practical applications. So what is the message here? Say for a firm that's not made this leap yet.

Yeah, if I if I'm talking too fast and giving you too much data too quickly because of my coffee this morning, let me give you kind of the headline of what I take out of this. So I'm not sure that firms are questioning whether to add advisory services. Nearly all firms that we work with have advisory in some form. I think what firms really need to ask themselves is are they willing to make those structural changes?

in their pricing model, in how they are using capital, in their talent strategy that is that will let that advisory work actually change the economics of the firm rather than just patting the service list with potential cross-selling opportunities that don't get utilized. So the next decade really of separation in the profession really I think is going to come down to who builds their firm around advisory versus who adds it as a service line.

That's really well put. I'm just thinking who drives the change, the push to advisory. It could be the economics of the situation. It could be the client that's asking for it more. It could be the tech that's leading it to them more because AI is enabling a lot of great advisory stuff. It could be the the L&D side, the HR, and the upskilling the people to price this right and deliver this right and have that commercial acumen and those business skills to be great trusted advisors. So

There's lots in play, but we can definitely see the trend. So if we zoom out all the way, Chelsea, out around everything we've covered in this season, the staffing, the private equity, now the advisory, is there a particular thread you can tie it all together with for us?

Yeah, I think that the profession has settled on a model and maybe a North Star. So we've said this a couple episodes ago, and I think it holds true today also. So that global staffing, outside capital, and advisory expansion, those aren't experiments. They are becoming infrastructure inside of a lot of firms. So the differences among those firms aren't whether they've adopted those things. It's are they deliberately executing on it? Are they leading their own strategy or letting their strategy lead them?

Take a breath here because there's so much going on here. It's a it's a wonderful place to leave it. I appreciate this has been a daily heavy run of episodes for you, but it's one that's filled a lot of important gaps and given you the reasons behind these numbers and these shifts. And and this is what INSIDE Public Accounting Podcast is really good at.

Yeah, everything we've covered across this whole IPA 500 series really just scratches the surface. Like Rob said earlier, the full August 2026 IPA insight report has the complete rankings, the trend data. If you want to see exactly where your firm stacks up, if I talked the numbers too fast and you would like to see them in print, it's available.

It is good to know because often we're so head down running our own fans we don't lift our heads up and and think across the wider ecosystem of accounting firms. So definitely check that out. It'll be a really valuable investment for you. And if you found this episode helpful, we appreciate you showing the love and liking, subscribing, following the podcast wherever you listen or watch. And leave us a comment. I know accounting types don't necessarily engage. We watch from the outside, but we really appreciate those comments. We read them all and it helps us shape future episodes.

Yeah, and just a reminder that our live Q&A is coming up September 24th. If you haven't already, use the YouTube link in today's show notes and click notify me so you'll get a reminder when we go live. And if you have a question you'd like us to answer, leave it in the comments and we might feature it during the event. Thanks for listening, and we'll see you next time on the INSIDE Public Accounting Podcast. Thanks for listening to today's episode. If you enjoyed this podcast, you can click below to subscribe and check out more from INSIDE Public Accounting.