Evan Vitale Consulting: Deloitte's revenues boosted by consulting growth

Tuesday, September 23, 2014

Deloitte's revenues boosted by consulting growth – Financial Times

Latest post from Evan Vitale Consulting -

Double-digit growth in Deloitte’s consulting division helped the professional services firm boost aggregate revenues 6.5 per cent to $34.2bn during the fiscal year ending May 31, in the latest sign that the big four are moving away from their roots in audit to more lucrative and faster-growing consulting work.

Revenues from consulting climbed 10.3 per cent to $11.4bn during the 12 months, compared with audit revenues, Deloitte’s second-largest business line by revenues, which grew 2.5 per cent to $10.1bn.

In the three other areas of its business that Deloitte breaks out, enterprise risk services increased revenues 4.2 per cent to $3.2bn, financial advisory was up 6.8 per cent to $3bn and tax and legal grew 7.7 per cent to $6.5bn.

Barry Salzberg, Deloitte global chief executive, said: “Consulting has been and will probably continue to be the fastest growing part of our business, because of its breadth of services.”

As the audit market has matured, Deloitte and its rivals have been snapping up consulting businesses to diversify into more lucrative areas. In 2013, Deloitte bought management consulting boutique Monitor Group and in October last year PwC agreed to buy Booz and Company, a mid-tier management consultancy. In July, EY agreed to merge with management consultant the Parthenon Group.

The growth of consulting among the big four has increased the potential for conflicts of interest. In September last year Deloitte was fined a record £14m for failing to manage conflicts of interest during its role as an adviser to the collapsed British carmaker MG Rover. Part of the fine is under appeal.

Mr Salzberg said: “We have a very robust client acceptance process and engagement management processes.”

The changing business dynamic also presents challenges for audit, he added: “[These] challenges relate to the relevancy of the audit, the modernisation of the approach to auditing and the fact that audit is not a very fast-growing business right now. When you put those together, a challenge is attracting people to the audit profession.”

Mr Salzberg, who is set to retire in June, said that the biggest changes over the course of his career spanning three decades at Deloitte are greater globalisation and interconnectedness of the economy; changing demographics, reflected in the declining growth of the labour force and the rising elderly population; and the impact of the advent of digital and ubiquity of data.

Looking ahead, he expects to see big growth in emerging and frontier markets such as India, South America and Africa, and continued expansion in areas like cyber security, data analytics, life sciences and technology.

Copyright The Financial Times Limited 2014. You may share using our article tools.

Please don’t cut articles from FT.com and redistribute by email or post to the web.

Source