US tax consultancy faces $12bn threat, but AI could deliver $19bn in gains
New research suggests AI could drive a $7bn (£5.2bn) net increase in the US tax consulting industry if firms shift focus from routine compliance to high-value advisory.
The report from Source Global Research revealed that despite the potential threat to revenue, over half of all US tax services are expected to be significantly powered by AI in the coming years.
The report concluded that if tax consulting firms deliver greater value to businesses, this will more than offset any predicted losses.
In the worst-case scenario, the US tax services market, which was worth $42bn (£31.3bn) in 2024, could shrink by $12bn (£8.9bn) (29 per cent), according to the report.
However, with increased efficiency, Source forecasts that the $12bn loss could be offset by a gain of up to $19bn (£14.1bn), resulting in a market that is worth $7bn more, giving a market that would be 16 per cent bigger.
Invest or lose out
Fiona Czerniawska, founder and CEO of Source Global Research, frames AI not as an option but as a survival requirement: “If they don’t [invest], they’ll lose out to competitors who do.”
However, she noted several key implications for tax consulting firms, including the need to pick and choose which services are most susceptible to AI replacement and focus on them.
“Clients aren’t looking for wholesale replacement of people with AI, and there’s a danger that firms invest too much in AI tools that clients don’t want and aren’t prepared to pay for,” she stated.
But she added, “While there are significant areas where AI can be used, human tax expertise will remain critical to complement the AI opportunities that lie ahead.”
In a recent feature on how AI is reshaping the consultancy sector, Morning Wire explained that ‘clients want results’, as the surge of AI will shift a consultant’s role, placing greater emphasis on outcomes as the determining factor of success.