Professional services firm Deloitte UK has grown its revenue to £2.7 billion in its latest financial year, driven by double-digit growth in its consulting division. Compared to a decade ago, Deloitte has managed to double in size, reveals an analysis by Consultancy.uk, making it after EY the fastest grower of the Big Four in the UK.
In 2005, Deloitte, at the time still operating as Deloitte & Touche, booked a revenue of £1.4 billion, with audit accounting for roughly one-third of the total income. Up to 2008 the accounting and consulting giant benefited from the booming economy and market for professional services, growing its revenue to just over £2 billion prior to the outbreak of the financial crisis. Following two meagre years, Deloitte returned to growth in 2011, bringing its revenue back to the pre-crisis level. In 2012 the Big Four saw its income jump by approximately £230 million, mainly the result of the integration of Deloitte Switzerland’s figures into its financials*. Last year the firm for the first time managed to break through the barrier of £2.5 billion, and on the back of 6.4% growth in its latest financial year Deloitte UK has elevated its income to £2.7 billion.
Across its four main business lines, audit rose 0.3% to £708 million, while consulting revenue grew 10.5% to £687 million. Revenues from its tax and financial advisory service divisions also outpaced audit, with 5% and 9% respectively. The Swiss practice increased its revenue by 13% to £267 million.
An analysis of the rates of growth per function reveals contrasting results. Between 2005 and 2015 consulting and corporate finance – the advisory business units – have grown by 120% and 90%, outstripping the traditional audit and tax markets. The trend is visible across the UK industry, as well as globally, and illustrates the changing nature of the large multi-service accounting and consulting firms, which are trying to expand areas such as consulting and advisory as their core markets mature. “Audit is a harder market to grow in, mainly because of continued fee pressure and less special work. The audit business won’t grow at the same rate as our consulting and advisory divisions,” explains David Sproul, Chief Executive of Deloitte.
Recent gains in consulting follow from continued high demand for external advisory support, particularly in the field of operational productivity, digital, customer excellence and cyber security. According to recent data from Source Information Services, the UK consulting market grew by 6.6% last year to £6.02 billion, with the good times expected to keep rolling in the industry. Another similar study, conducted by the MCA among its 50+ members, revealed a similar picture, concluding that consulting firms are buoyant about growth, forecasting a positive outlook across all sectors and functional areas.
Financial advisory was boosted by an increase in mergers and acquisitions activity during the 12 months of its financial year, while also here the future seems bright – a recent survey from EY showed that the global appetite for deals has reached its highest point in five years.
Decade long growth
With a growth rate of 105% between 2004 and 2014**, Deloitte can call itself the second fastest grower of the Big Four, trailing EY (+126%). PwC, the market leader in UK when it comes to accounting and consulting, earns approximately £260 million more in fees than Deloitte, and nearly £1 billion more than both KPMG and EY.
Looking ahead, Sproul says Deloitte is trying to improve the retention of women as it tries to address the lack of gender diversity in senior positions. The Big Four has the ambition to ensure that 25% of its partners – who on average racked up a profit of £822,000 in the year, up from £750,000 – will be women by 2020.
* Deloitte UK acquired the shares of Deloitte Switzerland in 2006, transforming the Swiss-based partners into members of a UK limited liability partnership. In FY2012 the revenue of Deloitte Switzerland was for the first time incorporated into the annual statements of the UK member firm.
** As FY2015 financials for the Big Four is not complete, the analysis was run for 2004 – 2014.