Big Four firms growing strongly in Germany and Australia

10 May 2019 Consultancy.uk

Demand for the world’s four largest professional services firms is booming in the UK, but the quartet are also thriving beyond Britain’s shores. The so-called Big Four of PwC, Deloitte, EY and KPMG are seeing revenues rise rapidly in nearby Germany, and halfway around the world in Australia.

In line with predictions from some of the market’s leading researchers, the Big Four’s consultancy services undeniably benefited from Brexit in 2018. 82% of 440 senior clients of consulting firms had said they expected to turn to these firms for answers to their Brexit worries, and thanks to that, PwC, KPMG, EY and Deloitte were able to navigate a year in which other lines of work slowed to enjoy a bumper 12 months.

However, the lessened extent (or total absence) of Brexit woes in other markets did not seem to slow the performance of the world’s largest consulting and auditing outfits. Despite a major economic slowdown in Germany and continued political uncertainty in Australia, the Big Four have enjoyed exceptional results in both nations. This is in part due to the gang of four pursuing relentlessly aggressive M&A campaigns in the two nations.

Big Four firms growing strongly in Germeny and Australia

In Australia, Deloitte has taken over a staggering 28 companies in the past four years – with purchases of everything from an identity security company to a data science and virtual reality illustration firm. As for KPMG, it made 16 acquisitions in the past four years. PwC purchased companies which drive infrastructure projects, a stake in an advertising agency, as well as buying up restructuring and deals business. EY meanwhile snapped up a tax law firm, two data analytics units, two digital consultancies and a market research firm. In Germany, all four have bought a number of firms in recent years too.

Ultimately, in Germany, this led the combined aggregate sales of the Big Four to stand at €7.5 billion, increasing by 36% on the €5.5 billion figure generated in 2015. Market leader PwC achieved €2.2 billion in total fee income alone, representing a 5.4% spike, while fellow Big Four member EY followed at €2 billion, with a rise of 8%. KPMG, the number three in Germany's accountancy and consultancy landscape, increased its overall performance by 10% to €1.83 billion, while Deloitte recorded the fastest growth of the foursome by gaining 18%, to generate €1.47 billion.

Meanwhile in Australia, the aggregated revenue of PwC, Deloitte, EY and KPMG topped a huge AU$7 billion in the last financial year. Together the Big Four employ more than 25,000 staff across Australia, led by a total pool of almost 2,500 partners. Similar to other Western markets, the booming revenues of the firms build on growth in areas experiencing high demand, such as cybersecurity, digital consulting and automation. At the same time, a drive to move into new areas of services, such as legal, design thinking, digital and creative services has boosted growth.

Global revenue of the Big Four firms

Of the consulting behemoths’ Australian wings, Deloitte has undoubtedly been the fastest grower in the last three years, seeing a 32% jump in revenue to AU$2 billion. The market leader in Australia, PwC, saw its revenues rise to nearly AU$2.4 billion. EY grew its turnover by 20% to AU$1.8 billion, while KPMG booked 9% growth and therefore remains in fourth place with revenues of AU$1.7 billion.

On top of this, all four firms have released optimistic growth forecasts for the coming year in both the Australian and German market.

Consulting drives growth

Consulting is a major driver of growth and of profitability, as margins for consulting work are usually higher than audit and accounting areas of business. In Germany for instance, the consulting divisions of Deloitte and PwC are now larger than the firms’ respective auditing divisions. Meanwhile at KPMG Germany, the advisory business is now in line with auditing, with the consulting division growing by 17%.

Globally, consulting work is driven by the internationalisation of customers, as consultancies are allowed to advise companies on these issues, as long as they are not also auditing the same clients. Another major driver is technology and digital consulting, as digital innovation is booming. This is impacting everything, from strategy and business models to operational matters, such as new operating models in finance, purchasing or human resources. Also in high demand are consulting services in the area of risk management, with the growing need to battle white-collar crime and maintain cybersecurity.

Related: Australia's management consulting industry tips the $5 billion mark.


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