Deloitte’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.
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%.
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.
