Karbon study links early tech adoption to higher revenue

Karbon has published a study linking earlier technology adoption by accounting firms with higher revenue per employee. The report is based on more than 1,200 survey responses collected over two years.

The research found that a typical tech-forward accounting firm in the US generates 28% more revenue per employee than a more cautious firm. It defined progressive firms as those that adopt new technology early or once its value is proven, while cautious firms adopt later or wait until it becomes an established standard.

Among US firms surveyed in both years, revenue per employee rose 9.5% for progressive firms and was unchanged for cautious firms. AI use has also become widespread across the sector, with 86.7% of firms now using at least one AI tool.

Many firms are integrating AI into existing systems rather than relying only on standalone products. The report found that 48% of firms access AI through software they already own, and 97.8% of those firms also use frontier AI models.

Mary Delaney, Chief Executive Officer at Karbon, said the findings highlight a gap between firms that test new tools and those that take a slower approach.

"The firms pulling ahead are the ones willing to rethink how they work," said Mary Delaney, Chief Executive Officer at Karbon. "AI is accessible to everyone, but there's a big difference between adopting a new tool and making it part of how an accounting firm operates. The firms willing to experiment, adapt and challenge the way they've always done things will be better positioned for what's ahead."

System changes

The study also tracked how accounting firms organise operational work across their software estate. Firms are shifting more day-to-day functions into practice management systems while still keeping specialist tools for particular tasks.

Nearly two-thirds of firms with practice management software, or 63.2%, now use it for five or more functions, up from 23.3% a year earlier. Among firms surveyed in both years, researchers counted 195 cases where functions moved from standalone applications into practice management systems, compared with 50 moves in the other direction.

The data suggested that firms with a more progressive technology mindset also run larger software stacks. Early adopters use 16.5 tools on average and run 7.2 operational functions through their practice management systems, while late adopters use 10.3 tools and use practice management systems for 3.1 functions.

Delaney said the number of functions handled through a practice management system can signal a firm's broader approach to technology. "The number of functions a firm manages through its practice management system is a good indicator of that firm's mindset toward new technology: progressive firms centralise more tasks than cautious ones," Delaney said. "As some firms rethink how they organise their work, they'll reduce complexity and give their teams more time to focus on their clients."

AI agents

The report also examined the use of AI agents as firms look for ways to increase capacity. Accounting firms have typically expanded output by hiring staff or outsourcing work, but some are now adding AI agents alongside those established methods.

Among US firms in the study, the typical firm using AI agents generates 17.7% more revenue per employee than the typical firm adding capacity without them. Two in five firms, or 40%, that are adding capacity now use AI agents alongside hiring employees and contracting out work.

Payroll spending as a share of revenue remained similar between the two groups. Payroll accounted for 44.5% of revenue among firms using AI agents, compared with 45.3% among firms that do not.

That suggests firms are not simply swapping labour costs for software costs at a broad level, although the report did not establish causation between adoption choices and financial outcomes. Instead, it presented the figures as evidence that AI tools are being added to existing operating models rather than replacing them outright.

Delaney said the research showed firms are combining old and new approaches to meet demand. "Our research shows firms are adding capacity in three ways: traditional hiring practices, contract work and the use of AI agents," Delaney said. "That said, AI agents aren't replacing traditional hiring outright. They're creating opportunities for accountants to spend more time on the complex decisions, strategic advice and client relationships that drive the most value."