I. Prologue: The Infotech & 4i Committee of the BCAS conducted a first of its kind practice management survey during June 2015 amongst its members to provide vital data points to the members to benchmark themselves with their peers and to make an objective assessment of their own practice and how they can scale up their practice. The survey results have been also compared with similar survey in the US where feasible, for further insight.
II. Data:
This being the first ever survey, the response from the members has been inadequate. At the same time, most response have been meaningful. Given below is the tabulated summary and analysis of the responses. We hope that this will induce many more firms to participate next time around. Rounding off and approximations have been used wherever data was incoherent to make it comparable.
III. Findings:
1) We stratified the responses into four categories: Firms having 1 proprietor-3 partners, 4-6 partners, 7-9 partners and 10 or more partners.
2) The tabulation of the responses for firms in INDIA is given below:
If we look at firms in USA for a comparison, here is a snapshot from a survey conducted by Rosenberg Associates:
3) The analysis of the responses is given below:
a) Respondents for firms with 7-9 partners were very few, and their data is skewed. Example: Average net revenue of such firms is Rs.1.51 crore, whereas the average of firms with 4-6 partners is Rs.2.46 crore. It is possible that the above data may not be a true representation of the real world firms having 7-9 partners.
b) Size:
i) Gross fee per partner is showing an upward trend; where larger the firm, larger is the gross fee per partner.
ii) Similarly, net profit per partner is showing an upward trend.
iii) Net revenues of the firms is showing a healthy upward trend, commensurate to the size of the firm.
c) % to Net revenues: Staff compensation is 32% of the net revenues, overheads (S, G & A) is 21% of the net revenues and partner net income is 45% of the net revenues of the surveyed firm. The staff compensation average in US is 42% which indicates that US firms pay more to their staff than Indian firms. It also conversely means that in India, partners take home ratio is more than their counterparts in USA, which may further indicate that US firms employ more qualified resources.
d) Net revenues of firms at Rs.62 lakh for a 1 proprietor-3 partner firm when compared to Rs.2 crore.
When one looks at US firms, the smallest of the firms have average revenues of Rs.8.8 crore, with the larger firms averaging Rs.45 crore and more. The per partner fees start at Rs.3.5 crore and go above Rs.7.8 crore on an average. Even the net profit per partner averages Rs.1.27 crore and goes to Rs.2.4 crore and beyond for larger firms.
Even discounting for purchasing power parity and professional market adjustments (developed market in US vs. emerging market in India) , Indian firms have a lot of catch up to do. They can bill so much more and partners take home significantly higher than what they currently do.
This strengthens the case for niche practices, for concentrated efforts of specialising in service areas, for commanding higher fees and developing higher per partner revenues. This reinforces the argument that CA firms in India need to come together, consolidate operations and become full service firms with partners focusing on specific service areas and sub-service areas.
IV. Epilogue:
The Infotech and 4i Committee hopes that this survey will be useful to our members, to plan for the future.
Please send your feedback and suggestions to gm@bcasonline.org mentioning “BCAS Practice Management Survey 2015” in the subject line.
