AI promises to free accountants from repetitive mundane tasks so they can focus on higher value advisory and analytics work that requires professional judgment. Offshoring, too, promises to free accountants from repetitive mundane tasks so they can focus on higher value advisory and analytics work that requires professional judgment. While it might intuitively seem these two things are in direct competition, offshore talent providers report that they have instead created powerful synergies with each other. 

Nick Sinclair, founder of offshorer accounting talent provider TOA Global, said AI is disrupting every part of the professional services landscape and offshoring is no exception. However, he does not view AI as directly competing with offshoring but, rather, adding a new layer to it that complements his company’s services, versus replacing them. Firms that embrace both, he said, gain a significant edge. 

“It’s absolutely AI and offshoring. That’s the winning formula. While AI assists offshore accountants with low-value tasks like data entry, basic reconciliations, and even first-draft reporting, human judgment remains crucial for validation and interpretation. That’s where our global team members shine. AI has strengthened our service delivery by reducing time spent on mundane tasks and increasing the speed-to-output for higher-value activities. We’ve actually built AI into our offshore model to amplify what our team can do, not replace,” he said. 

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Jigar Shah, the chief operating officer of accounting offshore talent provider Unison Globus, had a similar viewpoint, saying AI is more of a complement than a competitor to their offerings. To him, it is not an either/or proposition but a strategic and intentional integration of both. 

“AI may be reshaping the landscape in terms of how work gets done, but it doesn’t solve for the true talent crisis in the accounting profession. Firms that want to grow and stay competitive rely on educated, experienced professionals as well as the strategic application of AI in their business for efficiency,” he said.

Shah said his own firm has already gotten a lot of use out of AI in the realms of automated data extraction, invoice processing, anomaly detection, tax categorization, and intelligent scheduling. He added that, like many companies, they are also exploring AI-assisted client communication tools and predictive analytics. Overall, he said that AI has empowered them to deliver faster, more accurate and cost-effective services. He added that AI has reduced the company’s invoice processing time by 40%, allowing teams to allocate more time to client advisory services.

Sinclair, from TOA Global, similarly said that AI has become a critical part of their offshore provider strategy, allowing them to become a full-scope talent solutions provider. They use AI not only in their internal operations but also to speed up the delivery of client services as well as to deliver data-driven insights that support ROI of offshore teams. He added that, in a business model based on geographic distance, AI has also been valuable in improving the customer experience by using AI-based solutions to stay connected and be able to swiftly respond to queries or requests. 

In both cases, the success of these firms came from a willingness to adapt. Both have observed other offshore service providers that did not successfully do so, mainly because they were trying to hold on to old business models. Shah, from Unison Globus said that they have shifted their thinking in terms of not being a staffing firm per se but a talent and capability platform, which means they train, upskill and integrate people. Sinclair from TOA Global made a very similar point, noting that successfully transitioning into higher value activities in addition to their routine tasks has led them to avoid the fate of those who did not. 

“The firms that falter are usually those that resist change or fail to invest in capability-building. Offshoring is no longer about low-cost labor but it is about smart, tech-empowered partnerships. What has allowed Unison Globus to thrive is our commitment to continuous innovation, upskilling, and client-centricity. We do not see AI as a threat; we embrace it as a growth partner. Our proactive approach of integrating AI and continuous staff training has positioned us ahead of competitors who were slow to adapt, leading to increased market share,” said Sinclair. 

Mike Kempe, chief information officer at top 10 firm Grant Thornton, noted that his firm is not thinking in terms of offshoring or AI, and is not funneling clients towards one or the other. Instead, professionals think in terms of the specific problems a client is facing, and the specific solutions to address them, which may be AI, offshoring, or some combination of the two plus other resources. This in mind, he too felt it wasn’t productive to think in terms of AI versus offshoring, as the two are better seen as complements than competitors. 

“Our clients are asking for a quality service and a personalized service. They don’t want to feel like they’re number 14 in the queue. So we use a combination of AI, offshoring and near-shoring resources to meet that demand. Our clients are not necessarily asking for an AI solution, they’re asking for the best quality service at an affordable price. We can deliver that, and the way we do it is with offshore plus AI plus nearshore and onshore resources,” he said. 

The differentiating factors

This in mind, there will likely be some cases where AI is preferable and others where offshoring is preferable. Mark McAndrew, director of project management for firm management with Wolters Kluwer, also noted that people are often more interested in solving a specific problem than whether that problem is solved via AI or outsourcing. But what exactly they use depends on the specific situation.

“In some regards, you might tailor the type of outsourcing to specific customers in your segment or your customer base, and you choose to have those customers flow through a people centric part of your business, whereas other tax returns or other areas of your business might be more ripe for full automation,” he said. 

At the same time, this doesn’t mean there are never people who prefer one or the other. For example, he raised the possibility that a customer might not yet be comfortable with AI, and so might pursue outsourcing to maintain the human element. And conversely, he said, there are also businesses that aren’t comfortable outsourcing but don’t feel as hesitant about AI, meaning that they will be more apt to pursue opportunities with the latter versus the former. And then there’s customers who don’t necessarily have a strong preference for one or the other and may even switch between them as their organization grows. In this case, he said it’s common for smaller organizations to start with outsourcing and then, as they scale, slowly transition to AI-driven automation solutions.

“For customers that are looking to grow their business and invest in technology that will sustain them in the long term, outsourcing is a big play, and is an area where they can create  opportunity and [give themselves] time to be outside of the day to day while they figure out where their AI chips will reside, so to speak. And as you get mid-sized to large, you see customers that now have the wherewithal, or the internal talent, to focus on what they’ll do with AI,” he said. 

But even that is not certain. McAndrew noted that a firm might decide to keep its headcount low while growing its service capacity through automation, while another firm might have a more people-centric approach and so prefer offshore talent. 

“They complement one another, but do different, different things well,” he said.

Shah, from Unison Globus, said that one thing offshoring does particularly well is provide that human touch, which includes professional judgment, context-awareness and relationship building. He said his company’s clients do not just need tax execution but adaptable teams of experienced professionals that understand them.

“To be clear, offshoring has evolved greatly in the past years to provide highly skilled professionals who become an integral part of the firm’s team, solving problems, understanding the nuances of complex clients, and relieving bandwidth issues at the leadership level. This is not something AI can do,” he said.

This means that while AI technology is improving fast, it still won’t be able to completely replicate the advantages that offshoring provides, said TOA Global’s Sinclair.

“Accuracy alone doesn’t replace context, communication, or client relationships. Even if AI hits near-perfect accuracy—which I welcome, by the way—the need for skilled accountants won’t disappear. The nature of their work will shift, just like it has for decades. We’re preparing our team to be interpreters, not just processors. That means upskilling them in advisory thinking, business acumen, and communication. Offshoring will evolve into global insight teams, not just back offices. The reality is if AI replaces offshoring, that means it replaces accountants (no matter where they live), so there will be no industry (which won’t be the case),” said Sinclair.

The future

With this in mind, it would appear that offshore accounting talent isn’t going away anytime soon. In fact, all four sources interviewed for this story said that they are seeing demand for such services is growing, not shrinking. In the case specifically with Union Globus and TOA Global, they have reported some clients have even tried AI solutions and returned to offshoring once they found it didn’t meet their needs.

Shah said that clients had experimented with AI solutions mostly in data entry and document processing, but found it lacked the oversight and accuracy required for complex financial scenarios.

“What we offer is a blend of people + tech: our human-led, AI-enabled delivery model ensures accuracy, accountability, and scalability. That is something many firms found missing in AI-only solutions. A client who initially adopted an AI-driven bookkeeping solution returned to Unison Globus after facing challenges with categorizing complex transactions. Our team not only rectified the discrepancies but also provided strategic insights into financial reporting,” he said.

Sinclair, though, once more emphasized that the line between the two is not always so clear. Just as offshorers use AI, there are even AI solutions that supplement themselves with offshore labor. 

“Some of our clients who once relied on AI to reinvent themselves and their business models eventually turned to outsourcing for greater sustainability. Oftentimes, AI-based solutions in the accounting world are significantly supported by outsourced operations and offshore teams,” he said.

To Kepme, from Grant Thornton, the persistence of offshoring makes sense. He noted that when robotic process automation was getting very popular, people predicted huge headcount reductions that didn’t really materialize. As AI works its way through the profession, both on and offshore, there were similar concerns that, so far, have not been borne out. 

“We all thought that with RPA coming in, being able to automate all these processes, it would be kind of the lower value of work that people were doing manually and that would potentially lead to some dramatic reductions in head count. Reality was it didn’t. Our offshore talent now is bigger than it’s ever been. We have more people offshore than we’ve ever had,” he said. 

Accounting firms are reporting bigger profits and more clients, according to a new report.

The report, released Monday by Xero, found that nearly three-quarters (73%) of firms reported increased profits over the past year and 56% added new clients thanks to operational efficiency and expanded service offerings.

Some 85% of firms now offer client advisory services, a big spike from 41% in 2023, indicating a strategic shift toward delivering forward-looking financial guidance that clients increasingly expect.

AI adoption is also reshaping the profession, with 80% of firms confident it will positively affect their practice. Currently, the most common use cases for AI include: delivering faster and more responsive client services (33%), enhancing accuracy by reducing bookkeeping and accounting errors (33%), and streamlining workflows through the automation of routine tasks (32%).

“The widespread adoption of AI has been a turning point for the accounting profession, giving accountants an opportunity to scale their impact and take on a more strategic advisory role,” said Ben Richmond, managing director, North America, at Xero, in a statement. “The real value lies not just in working more efficiently, but working smarter, freeing up time to elevate the human element of the profession and in turn, strengthen client relationships.”

Some of the main challenges faced by firms include economic uncertainty (38%), mastering AI (36%) and rising client expectations for strategic advice (35%). 

While 85% of firms have embraced cloud platforms, a sizable number still lag behind, missing out on benefits such as easier data access from anywhere (40%) and enhanced security (36%).

Private equity firms have bought five of the top 26 accounting firms in the past three years as they mount a concerted strategy to reshape the industry. 

The trend should not come as a surprise. It’s one we’ve seen play out in several industries from health care to insurance, where a combination of low-risk, recurring revenue, scalability and an aging population of owners create a target-rich environment. For small to midsized accounting firms, the trend is exacerbated by a technological revolution that’s truly transforming the way accounting work is done, and a growing talent crisis that is threatening tried-and-true business models.

How will this type of consolidation affect the accounting business, and what do firms and their clients need to be on the lookout for as the marketplace evolves?

Assessing the opportunity… and the risk

First and foremost, accounting firm owners need to be aware of just how desirable they are right now. While there has been some buzz in the industry about the growing presence of private equity firms, most of the activity to date has focused on larger, privately held firms. In fact, when we recently asked tax professionals about their exposure to private equity funding in our 2025 State of Tax Professionals Report, we found that just 5% of firms have actually inked a deal and only 11% said they are planning to look, or are currently looking, for a deal with a private equity firm. Another 8% said they are open to discussion. On the one hand, that’s almost a quarter of firms feeling open to private equity investments in some way. But the lion’s share of respondents —  87% — said they were not interested.

Recent private equity deal volume suggests that the holdouts might change their minds when they have a real offer on the table. According to S&P Global, private equity and venture capital-backed deal value in the accounting, auditing and taxation services sector reached more than $6.3 billion in 2024, the highest level since 2015, and the trend shows no signs of slowing. Firm owners would be wise to start watching this trend to see how it might affect their businesses — whether they are interested in selling or not.

Focus on tech and efficiencies of scale

The reason this trend is so important to everyone in the industry right now is that the private equity firms entering this space are not trying to become accountants. They are looking for profitable exits. And they will do that by seizing on a critical inflection point in the industry that’s making it possible to scale accounting firms more rapidly than ever before by leveraging technology to deliver a much wider range of services at a much lower cost. So, whether your firm is interested in partnering with private equity or dead set on going it alone, the hyperscaling that’s happening throughout the industry will affect you one way or another.

Private equity thrives in fragmented businesses where the ability to roll up companies with complementary skill sets and specialized services creates an outsized growth opportunity. Andrew Dodson, managing partner at Parthenon Capital, recently commented after his firm took a stake in the tax and advisory firm Cherry Bekaert, “We think that for firms to thrive, they need to make investments in people and technology, and, obviously, regulatory adherence, to really differentiate themselves in the market. And that’s going to require scale and capital to do it. That’s what gets us excited.”

Over time, this could reshape the industry’s market dynamics by creating the accounting firm equivalent of the Traveling Wilburys — supergroups capable of delivering a wide range of specialized services that smaller, more narrowly focused firms could never previously deliver. It could also put downward pressure on pricing as these larger, platform-style firms start finding economies of scale to deliver services more cost-effectively.

The technology factor

The great equalizer in all of this is technology. Consistently, when I speak to tax professionals actively working in the market today, their top priorities are increased efficiency, growth and talent. Firms recognize they need to streamline workflows and processes through more effective use of technology, and they are investing heavily in AI, automation and data analytics capabilities to do that. Private equity firms, of course, are also investing in tech as they assemble their tax and accounting dream teams, in many cases raising the bar for the industry.

The question is: Can independent firms leverage technology fast enough to keep up with their deep-pocketed competition?

Many firms believe they can, with some even going so far as to publicly declare their independence.  Regardless of the path small to midsized firms take to get there, technology-enabled growth is going to play a key role in the future of the industry. Market dynamics that have been unfolding for the last decade have been accelerated with the introduction of serious investors, and everyone in the industry — large and small — is going to need to up their games to stay competitive.