This Is The Next Industry AI Will Disrupt

Dominic Vitucci, founder of Onshore, argues that the accounting profession is on the verge of a tectonic shift, driven by AI that fundamentally changes how services are delivered. The long-standing reverence for the “Big Four” and other large accounting firms is unwarranted, as they have become artificial middlemen in a transaction that is ultimately between a company and the government.

The Anatomy of Traditional Accounting Work

The daily work of a junior accountant is often far from the conceptual, high-level advising clients imagine. It primarily involves manual, repetitive tasks. A prime example is the process for calculating the R&D tax credit:

• Manual Data Transfer: The core task involves moving data from various documents into a spreadsheet and performing simple arithmetic.
• Subjective Data Gathering: A significant portion of the work involves interviewing employees to estimate the percentage of their time spent on qualifying R&D activities. This process can be highly subjective and inefficient, involving partners coaching employees to claim higher percentages to maximize the credit.
• Substantiation is Key: The real challenge isn’t the calculation itself, but proving the work occurred. This requires sifting through “contemporaneous documentation” like Jira tickets, GitHub issues, and other records to substantiate the claims made to the IRS.

It is this need to understand and process vast amounts of unstructured text and documentation that has unlocked the potential for AI, a task that was impossible for earlier automation technologies like RPA.

Why Incumbents are Failing to Adapt

Despite the clear potential for disruption, large accounting firms are structurally incapable of innovating effectively for two primary reasons:

1. A Business Model That Incentivizes Inefficiency: The entire industry is built on the billable hour. AI and automation present a direct threat to this model.

   “As soon as the hour becomes a diminished unit of value, you no longer really have a whole lot of ground to stand on when you say, ‘Hey, certainly pay me $1,000, $1,500, $2,000 an hour.’”

   For junior and mid-level staff, whose employment and advancement depend on achieving a target number of billable hours, a tool that automates 80% of their work is perceived not as a help, but as a threat to their job.

2. Structural and Cultural Inertia: The partnership structure creates a deep-seated resistance to change. Senior partners, often near a mandatory retirement age, have no financial incentive to make massive, long-term investments in technology from which they will never reap the benefits. This creates an “asymmetric value prop” where decision-makers prioritize short-term profits over long-term survival. Their attempts at innovation are often superficial, such as buying thousands of Co-pilot licenses without any strategy for implementation or hiring external development agencies, which rarely succeeds.

Onshore’s Pivot: From Enabler to Competitor

Initially, Onshore was founded to sell software to accounting firms to help them become more efficient. After two years of facing resistance from a customer base that was fundamentally unmotivated to adopt the technology, the company pivoted.

The realization was that the true beneficiary of the service is not the accountant, but the end client—the taxpayer. Onshore fired its accounting firm customers and rebuilt its software to serve corporations directly, effectively cutting out the middleman.

“This whole ‘sell shovels in a gold rush’ thing. What if you just like burned all the shovels, broke them in half, and just brought the gold by the handful to the company? Like, that seems a lot better to me.”

This direct-to-market approach, combined with a “wedge” strategy of mastering one service (R&D tax credits) before expanding, has proven tremendously successful.

The Future Shape of the Accounting Industry

The disruption from AI will reshape the entire profession:

• Efficiency and Headcount: AI-native firms operate at a completely different scale. Onshore is targeting \$100M in revenue with about 75 employees, translating to over \$1M in revenue per employee. This is an order of magnitude higher than the estimated \$100k-\$150k per employee at a traditional firm.
• Flattening the Pyramid: The traditional firm structure, with a massive base of junior accountants performing manual tasks, will be inverted. AI agents will perform the bulk of this work.
• Evolving Human Roles: The number of total employees in the industry will likely shrink. The humans that remain will not be data entry clerks but will have more technical backgrounds. Their roles will focus on sales, high-level strategic expertise, regulatory compliance, and working in concert with AI systems.

While the widespread realization that AI can perform knowledge work as well as or better than humans is imminent, the actual impact on employment figures may still be five to seven years away. The transition is happening, and the firms of the future will look more like tech companies than the accounting partnerships of the last century.

• Tags:
• Future of Work
• LLMs
• Automation
• Accounting
• AI Disruption
• Onshore