Deloitte lifted its global revenues by almost a fifth to a record last year, as a boom in tech consulting and corporate deal-making helped cement its position as the largest of the Big Four professional services firms.
The accounting and consulting group reported revenues of $59.3 billion (€59.3 billion), with about $16 billion coming from selling services as part of alliances with tech groups such as Amazon Web Services, Google, Salesforce and SAP.
Revenue from partnerships with the world’s biggest tech groups is increasingly important to consultants’ business models. It is also part of the rationale for EY, the third-largest of the Big Four, pursuing a break-up of its audit and advisory businesses.
EY is auditor to several big tech groups, meaning conflict of interest rules have prevented the firm’s consultants from partnering with them in the way that has helped drive revenues at Deloitte.
Deloitte’s global chief executive Punit Renjen rejected the possibility of his firm pursuing a split, saying that combining audit and advisory work was “at the core” of the organisation.
“We will not separate and split our businesses,” he said. “The multidisciplinary model and private partnership culture continue to be the preferred strategy and structure.”
He said: “Our results speak for themselves. We will not monetise our collective life’s work or that of the generations that preceded us.”
EY’s planned break-up — expected to win the approval of its global bosses this week — would deliver multimillion-dollar windfalls to the current generation of partners. It has led to speculation that partners at rival Big Four firms would want to follow suit, potentially reducing the financial rewards and promotion opportunities on offer to future generations of partners.
Demand for advice on tech projects has soared as companies continue to shift to selling and supporting customers online after the pandemic and update their systems to exploit data and make supply chains more resilient.
Consulting was the fastest-growing of Deloitte’s business lines last year, increasing revenues 24.4 per cent to $25.8 billion. Deloitte is the least reliant of the Big Four on audit revenues, generating the smallest total despite having the largest overall group revenues.
Audit and assurance revenues grew at a more modest 8.7 per cent to $11.4 billion as companies continue to turn to auditors to review their disclosures relating to their impact on the climate.
Total sales across the roughly 150 countries where Deloitte operates rose 18.1 per cent to $59.3 billion in the 12 months to May. The increase was matched by a rapid expansion of its workforce, with total headcount climbing to 415,000 from less than 350,000 a year earlier.
The smaller financial and risk advisory divisions both grew by about a fifth while sales of tax and legal advice rose 11.5 per cent to $9.9 billion.
The Americas, which account for about half of Deloitte’s business globally, were the fastest-expanding region, increasing sales by 22.1 per cent.
Deloitte is the first of the Big Four to formally announce its results for the most recent financial year but PwC expects to report record sales of about $50 billion, its boss Bob Moritz told the Financial Times in July.
EY has told staff it generated global revenues of $45.4 billion for its most recent financial year, a 13.5 per cent increase, the FT revealed in July. KPMG is expected to report its figures in December as its financial year does not close until the end of September.
The Big Four, which say they advise companies on improving transparency and winning trust from society, do not disclose their global profits.
The firms are structured as networks of national partnerships, with profits retained locally and paid out to the partners who own and run the business. The local firms pay an annual fee and agree to abide by an agreed set of standards to use the global brand. — Copyright The Financial Times Limited 2022
