Tax has long been regarded as one of the great advisory disciplines within professional services. It sits at the intersection of regulation, finance, corporate strategy and governance. That description remains true, but it has become incomplete. Beneath the advisory narrative, the economics of large parts of tax have changed. Many tax practices no longer operate primarily as collections of individual advisory engagements. Increasingly, they behave more like infrastructure businesses built around recurring work, standardized delivery and institutional capability. (PwC – Connected Tax Compliance; EY – Tax and Finance Operate)
The shift emerged because the nature of the work changed. Compliance, payroll tax, indirect tax, tax provisioning, transfer pricing documentation, Country-by-Country Reporting and Pillar Two all share one characteristic: they are recurring. Clients purchase these services continuously rather than as one-off engagements. As regulatory obligations expanded, simply adding more tax professionals was no longer enough. Firms invested in global delivery centres, standardized methodologies, integrated technology platforms and centralized operating models capable of delivering recurring work across jurisdictions. KPMG’s Delivery Network, for example, supports clients in more than one hundred jurisdictions and processes more than one million tax returns annually. Industrialization was not primarily a technology strategy. It was an economic response to recurring demand. (OECD – Tax Administration 3.0; OECD – Pillar Two: Global Anti-Base Erosion Rules; KPMG – Delivery Network for Tax)
Tax is therefore not unique. It is one of the first professional disciplines in which two economic models now coexist within the same practice. One is built around recurring expertise, scale and institutional capability. The other still depends on human judgment, trusted relationships and professional accountability. Tax is not the destination of this article. It is the starting point.
Recurring Work Naturally Industrializes
The industrialization of tax was not the result of a deliberate strategy. It emerged because the nature of the work changed. Over the past two decades, governments introduced successive waves of regulation, including Country-by-Country Reporting, DAC6, the OECD’s Base Erosion and Profit Shifting (BEPS) initiatives, real-time VAT reporting and, most recently, Pillar Two. Each new requirement increased the volume of recurring work that multinational organisations needed to perform. Tax gradually shifted from an annual compliance exercise to a continuous operational process embedded within everyday business activities. (OECD – Tax Administration 3.0; OECD – Pillar Two: Global Anti-Base Erosion Rules)
This pattern is not unique to tax. Whenever expertise becomes sufficiently recurring, organizations face the same economic choice: continue recreating expertise engagement by engagement, or institutionalize it through processes, technology and platforms. Delivering thousands of similar activities through locally organized advisory teams becomes difficult to scale, expensive and inconsistent. The rational response is to standardize delivery, centralize activities and build institutional capability rather than relying solely on individual expertise. This is precisely the direction taken by the largest professional-services firms. Global delivery centres have evolved into integrated operating platforms supporting tax, audit and advisory services worldwide. Competitive advantage increasingly comes from continuously improving the platform through which recurring work is delivered rather than repeatedly performing individual engagements. (KPMG – Delivery Network for Tax; Deloitte – Tax Operate)
The same economic logic already extends beyond tax. Payroll, bookkeeping, managed services, legal process outsourcing and parts of cybersecurity have all become increasingly standardized and platform-based as recurring work expanded. Industrialization is therefore not primarily a story about technology. It is a story about economics. Technology accelerates the transition, but recurring work makes it economically inevitable.
The Platform Becomes the Product
As recurring work industrializes, the source of competitive advantage changes. In a traditional advisory model, value is created through the expertise of individual professionals. Once recurring work becomes standardized, that expertise is progressively embedded within methodologies, workflows, technology and operating models. Every improvement benefits thousands of future engagements rather than just one. Competitive advantage shifts from individual expertise to institutional capability.
This helps explain why every major professional-services firm is investing heavily in integrated operating platforms. Deloitte’s Tax Operate, EY’s Tax and Finance Operate, PwC’s Connected Tax Compliance and KPMG’s Delivery Network are not isolated technology initiatives. They represent a new delivery model in which clients purchase access to an operating capability rather than repeatedly buying individual expertise. The platform integrates data, workflows, AI, controls, delivery centres and professional knowledge into a scalable service. The platform increasingly becomes the product. (Deloitte – Tax Operate; EY – Tax and Finance Operate)
The commercial implications are equally significant. Infrastructure businesses are sold differently from traditional advisory services. Clients increasingly expect standardized delivery, predictable outcomes, subscription pricing and continuous improvement. They compare providers on reliability, scalability, integration and cost rather than primarily on the reputation of individual partners. This also changes client selection. Onboarding clients onto a platform requires significant investment in technology, data integration and governance. Not every client generates sufficient recurring revenue to justify that investment. The question is no longer simply whether a client is profitable. It is whether the client fits the economics of the platform. This may help explain why several firms have recently begun restructuring client portfolios, particularly in the Nordic market. I explore this development further in Case Study 39: When Clients No Longer Fit the Economics of the Big Four.
AI Rewards Organizations That Have Already Institutionalized Expertise
Much of the current discussion about artificial intelligence assumes that AI is transforming professional services. In reality, AI is accelerating a transformation that was already underway. Long before generative AI emerged, the largest firms had already invested in standardized workflows, centralized delivery, integrated platforms and institutionalized expertise. AI did not create this operating model. It arrived at the moment it became ready to scale.
The reason is economic rather than technological. Artificial intelligence creates the greatest value where expertise has already been embedded in repeatable processes, structured data and integrated operating platforms. Firms are therefore embedding AI directly into their operating models rather than treating it as a standalone productivity tool. AI rewards organizations that have already institutionalized expertise. (KPMG – KPMG and Anthropic Global Alliance)
The implications extend far beyond tax. Organizations that have invested in institutional capability are likely to capture disproportionate value from AI because the technology can operate across an integrated platform rather than supporting isolated individuals. AI therefore does not create a single future for professional services. It amplifies a divergence that was already emerging. I explore this broader shift in When Expertise Becomes Infrastructure: How AI Is Changing the Economics of Professional Services.
The Highest-Value Work Is Moving in the Opposite Direction
If recurring expertise increasingly follows infrastructure economics, what happens to the work that does not? It moves in the opposite direction. While recurring activities become standardized and technology-enabled, the highest-value parts of the profession become increasingly dependent on human judgment. Complex transactions, tax controversy, disputes, investigations, strategic transformation and board advisory derive their value not from repetition, but from interpretation, experience and the ability to make defensible decisions where no standard answer exists. As recurring expertise becomes increasingly accessible through platforms and AI, scarcity shifts from expertise itself to human judgment. (Chambers and Partners – Global Tax Rankings)
This divergence also changes how professional services are sold. Infrastructure businesses compete on efficiency, reliability, integration and price. Clients buy predictable outcomes delivered through scalable operating platforms. Judgment businesses compete through relationships, reputation, trust and demonstrated experience. Boards are not buying capacity. They are buying confidence in decisions where uncertainty remains high. Infrastructure is bought. Judgment is trusted.
The competitive landscape is changing accordingly. As recurring work becomes industrialized, the advantages of large multidisciplinary firms become even stronger. At the same time, those advantages matter less for judgment-intensive engagements, where independence, senior expertise and trusted relationships remain decisive. In many jurisdictions, legal professional privilege creates an additional advantage for law firms that accounting firms cannot always replicate. The future competitive boundary may therefore no longer run primarily between the Big Four, law firms and specialist boutiques. It may increasingly separate businesses competing on platform economics from those competing on judgment economics. (UK Supreme Court – Prudential plc v Special Commissioner of Income Tax [2013] UKSC 1)
Recurring Expertise Becomes Infrastructure. Human Judgment Becomes Premium.
A broader pattern now emerges. The distinction that increasingly matters is no longer between tax, audit and consulting. It is between different types of work. Wherever expertise is recurring and repeatable, it becomes embedded within processes, technology and operating platforms. Wherever work depends on interpretation, trust and professional accountability, value remains concentrated in human judgment. The profession is therefore not moving toward a single future operating model. It is separating into two fundamentally different economic systems.
Recurring work follows infrastructure economics. Clients expect automation, integration, reliability and continuous improvement because they are purchasing an operating capability rather than repeatedly paying for the recreation of expertise. Judgment-intensive work follows premium economics. Clients continue to pay for trusted advisors who can interpret ambiguity, exercise judgment and assume accountability where no standardized answer exists.
Recurring expertise becomes infrastructure. Human judgment becomes premium.
This distinction helps explain why so many developments across the profession appear connected. AI creates disproportionate value in recurring work. Global delivery centres continue to expand. Managed services continue to grow. Platform investments accelerate. Specialist boutiques continue to emerge. Private equity increasingly favours businesses with recurring revenue and scalable operating models. These are not separate trends. They are different expressions of the same underlying economic shift.
Perhaps the most important implication is that the future segmentation of professional services will not primarily be by service line. It will increasingly be by economic model. The same tax, audit or consulting practice may contain both platform businesses and premium judgment businesses operating under the same brand. Understanding where activities sit on this continuum is becoming more important than understanding which service line they belong to. It is not professions that are splitting. It is the economics underneath them.
The Two-Speed Firm Is Emerging
If recurring expertise and judgment-intensive work increasingly follow different economics, it becomes difficult to optimize both within the same organizational model. Traditional partnerships were designed for businesses where value resided primarily in the expertise of professionals and the relationships they maintained with clients. That model remains highly effective for judgment-based work. It is less naturally suited to businesses that depend on long-term investment in technology platforms, AI, global delivery networks and institutional infrastructure. The tension many firms are experiencing is therefore not simply strategic. It is structural.
The structural tension becomes even more visible when viewed through the lens of incentives. Traditional partnerships reward annual revenue, utilization, partner profitability and individual client relationships. Infrastructure businesses reward reuse, standardization, automation, platform adoption and long-term investment in institutional capability. One model optimizes annual performance. The other optimizes long-term platform value. Many of today’s debates around AI, managed services, client portfolios, private equity and governance are ultimately debates about which economic model the firm is trying to optimize.
This is what I describe as the Two-Speed Firm. One part of the organization increasingly behaves like an infrastructure business, creating value through platforms, technology, AI and operational excellence. The other continues to behave like a professional partnership, creating value through judgment, trust, relationships and reputation. These two businesses increasingly coexist within the same firm, but they require different investment models, pricing strategies, governance structures and performance measures. I explore these organizational implications further in The Two-Speed Firm – Why Professional Services Firms Are Quietly Splitting Into Multiple Economic Systems Under One Brand.
Closing Thoughts
This article began with tax, but it is ultimately about the changing economics of professional expertise. Tax simply provides one of the clearest examples of what happens when knowledge becomes sufficiently recurring to justify institutionalization. Over the past two decades, recurring tax work evolved from individual advisory engagements into continuously delivered operating capabilities supported by platforms, global delivery centres and, increasingly, AI.
At the same time, the highest-value work moved in the opposite direction. As recurring expertise became increasingly embedded within platforms, the relative value of human judgment increased. Clients are increasingly buying two fundamentally different things. They buy infrastructure where reliability, scalability and cost matter. They buy judgment where trust, experience, independence and accountability matter.
Perhaps the most important conclusion is that the future segmentation of professional services will not primarily be by service line. It will increasingly be by economic model. The same tax, audit or consulting practice may contain both platform businesses and premium judgment businesses operating under the same brand. Firms that recognize this shift early will be better positioned to make decisions about technology, AI, capital allocation, client portfolios and governance.
Tax is therefore not simply an example of how one profession is changing. It offers an early glimpse into how knowledge-intensive industries evolve when recurring expertise becomes infrastructure and human judgment becomes premium.
What This Means for Boards
Boards should stop asking how AI will affect individual service lines and start asking how it will reshape the economics of the firm. The most important distinction is no longer between tax, audit and consulting. It is between recurring work that increasingly behaves like infrastructure and judgment-intensive work that continues to depend on trust, experience and professional accountability. Those two businesses require different operating models, investment priorities, governance approaches and incentive systems. Managing them as though they are one business risks optimizing neither.
Boards should therefore begin asking a different set of strategic questions.
- Which activities within our firm are becoming infrastructure, and which remain judgment businesses?
- Which capabilities should we standardize, and which should remain deliberately partner-led?
- Which clients justify long-term investment in platforms, AI and integrated operating models, and which no longer fit those economics?
- Are we managing client portfolios based on historical relationships or future economic value?
- Are our pricing models aligned with the fundamentally different value propositions of infrastructure and judgment?
- Do our incentive systems encourage investment in long-term institutional capability as well as annual financial performance?
- Are our governance structures capable of overseeing two fundamentally different economic models within the same firm?
- If we were designing this firm today, would we organize it the way it is organized today?
The industrialization of tax is much more than a story about tax. It provides an early indication of how professional-services firms are likely to evolve over the coming decade. Firms that recognize this shift early will be better positioned to make decisions about technology, AI, capital allocation, client portfolios and governance. Those that continue to organize themselves primarily around traditional service lines may increasingly find that their organizational model no longer reflects how value is created.
I work with boards and executive teams on independent perspectives related to professional-services transformation, governance, operating models, platform economics, and the changing economics of professional-services firms.
If your leadership team is working through similar questions around ownership structures, governance alignment, investment pressure, or operating-model evolution, you may find my Future of Professional Services board sessions and Economic Reality Review valuable. Feel free to reach out.
Sources
- OECD – Tax Administration 3.0: The Digital Transformation of Tax Administration
- OECD – Pillar Two: Global Anti-Base Erosion (GloBE) Rules
- PwC – Connected Tax Compliance
- EY – Tax and Finance Operate
- Deloitte – Tax Operate
- KPMG – Delivery Network for Tax
- KPMG – KPMG and Anthropic Global Alliance
- UK Supreme Court – Prudential plc v Special Commissioner of Income Tax [2013] UKSC 1
- European Commission – VAT in the Digital Age (ViDA)
- Chambers and Partners – Global Tax Rankings