First and foremost, if another firm gains competitive advantage that often puts you at a competitive disadvantage. An example is that firms located in major metropolitan areas such as Chicago, Philadelphia, Los Angeles, etc. that have historically billed out for services at a higher rate, are now acquiring or merging with firms outside the Chicagoland area and pushing the work to those areas that can or do perform quality work at lower rates. If the client is billed at the historical rate and services are now performed at a lower cost, the reduction in service cost (additional profit) becomes a tool to accomplish many things including, but not limited to:  

• Competing with you at comparable rates
• Reducing the amount of work you can go after or compete for
• Having the financial wherewithal to acquire currently available talent
• Expand its geographic reach infringing on an area or industry that you may serve
• Negatively impact your bottom line directly or indirectly
• Make it less likely you can compete for a piece of the business on certain clients   

NOTE: Effective in 2011, the CPA exam will be administered for the first time outside the United States. Though it is scheduled to only be administered in five other countries next year, the writing is on the wall. Larger firms with international reach or relationships will soon make it standard operating procedure to offshore much work and reap enormous profits furthering their competitive advantage. 

Should you hit the panic button?  No, but you should begin a process of strategic planning and practice analysis. It does not take much thought to realize the potential ripple effect on the smaller firms in the coming years.