• Register
Return to: Home > News > Tax > ANALYSIS: Emerging markets power Deloitte's growth

ANALYSIS: Emerging markets power Deloitte's growth

Pie chart showing Deloitte's service line fee splitDeloitte's global growth has been driven by strong performances in Asia-Pacific, Latin America and a strategy to build consulting and advisory services.

In September, Deloitte announced it had increased global revenues by 8.4% (in US dollar terms) to a record $28.8bn. The network reported local currency growth of 7.7%, which is the network’s strongest growth since 2008.

Last year, Deloitte overtook PwC for the first time, bringing in $9m more in revenue. PwC has just announced it  regained top position after posting growth of 10% to $29.2bn.

Deloitte’s success in recent years is due to building its consulting business, which dwarves that of its rivals. While PwC is a larger audit and tax network, Deloitte earns nearly 3.5bn more in consulting and advisory revenue alone.

Audit and tax have been less profitable businesses than consulting in recent years due to enormous pressure on fees. Audit also has a higher man-hours to billable fees ratio than many advisory services.

In addition, there is more headroom to grow consulting and advisory services than audit as the blue chip company audit market is saturated and clients often hold onto audit firms for several years.

The network’s global workforce reached 182,000, a net increase of 12,000, and is expected to grow more than 35% to 250,000 by FY2015.

Organic growth

Deloitte global chief executive Barry Salzberg told International Accounting Bulletin Deloitte’s growth was mostly organic.

"Obviously we have made many acquisitions in the course of many years but it is now embedded in our system and in the past year it is almost all organic growth," Salzberg said.

Line graph showing a revenue timeline from 2006-2011 for the Big Four accountancy firms Salzberg said the economy has allowed the firm to drive advisory services, which contributed to growth of 15.1% in financial advisory and 14.8% in consulting.

"Going forward, with the concern over the economy," Salzberg added. "We are guarded about our future growth but we believe we have a sufficient platform and are prepared to enjoy growth very similar to the growth we enjoyed this past year.

"In the area of services lines, our focus will be on data analytics. We are currently very significantly invested in advance capabilities and we are looking to invest more in that area organically and inorganically."

Deloitte reported more moderate increases in audit (4.7%) and tax (5.2%).

Salzberg said the firm’s response to global fee pressure is to promote a more complete audit service.

"While we maybe seeing a slower growth in those businesses than our other businesses, it’s clearly a growing and significant piece of our business, and we’ll continue to invest in it," Salzberg added.

Strong in Asia

Deloitte’s Asia-Pacific region, which grew combined revenue by 15.8%, was the best-performing region for the seventh consecutive year with nearly all Deloitte member firms growing by double-digit figures.

Deloitte China grew 8.3% while member firms in Australia and India achieved growth in excess of 25%.Table showing Deloitte's regional performance breakdown

Salzberg said the growth could be attributed in part to emerging markets and the growth potential of both China and India. The high growth in Australia was led by a 28% increase in consulting services.

"The Australian firm is one of the most innovative firms [in our network]," he said. "They have a very serious investment and commitment to an innovation platform and analytics capabilities, and both of those areas did superbly in that market. [When you] combine that with a robust consulting business, they did very well."

Elsewhere, the Americas region grew 10.4%, led by firms in Brazil and Chile, which grew in excess of 20%.

Europe, Middle East and Africa revenues increased by 3.2%, with member firms in the Middle East, Sweden, Turkey and Norway experiencing double-digit growth.

"European countries like Germany with opportunities to leverage the market in a place like Turkey," Salzberg said.

Deloitte is halfway through a four-year $1bn investment programme. This includes investing $500m in FY2012 in priority markets: Brazil, India, Russia, China, Japan, Middle East and South-East Asia.

The network will also pour $300m in Deloitte Audit, a new audit delivery tool, and build member firms’ analytics capabilities, which is expected to grow by more than 40% in FY2012.

Deloitte is building professional service capabilities for medium-sized companies, including private companies, mid-sized private equity firms, next-gen companies and mid-cap multinational companies. The network will also invest millions in sustainability services.

Top Content

    Brazil: regulation and technology form basis for recovery

    Opportunities in the capital markets and the ever-growing influence of technology are expected to have a significant impact on the Brazilian accounting profession over the next 12 months, writes Paul Golden.

    read more

    Mentoring support and the opportunity to delegate

    Jon Lisby will be known to many from his former role as CEO of Kreston International. Here, he explains the background to his new venture, Global Alliance Advisory Services (GAAS), and how he aims to offer support to alliance CEOs.

    read more

    Global by name, global by nature

    Stephen Heathcote became chief executive officer of PrimeGlobal on 1 June 2019. Robin Amlôt met him to discuss the various new challenges that he has taken on, and his ambitions for the association.

    read more

    ARGA team, assemble!

    The new top team has been named that will see in root-and-branch reform at the Financial Reporting Council (FRC) as it transforms into the Audit, Reporting and Governance Authority (ARGA). Will the new duo be as dynamic as some are hoping? Robin Amlôt reports.

    read more

    CORONAVIRUS TIMELINE: REACTIONS FROM THE ACCOUNTANCY PROFESSION

    As the Coronavirus (COVID-19) continues to spread across the world, the International Accounting Bulletin and The Accountant will be collating all the latest news and updates from the profession on the pandemic’s impact.

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.