Deloitte UK doubles in past decade, Advisory key driver

25 August 2015 Consultancy.uk

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.

Revenue of Deloitte UK

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.

Deloitte UK Revenue Growth per Operating Segment

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.

Revenue of Big Four in UK

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.

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PA Consulting results reveal record 14% revenue growth

17 April 2019 Consultancy.uk

Global professional services firm PA Consulting has reported another year of strong growth, outpacing the global consulting market significantly over the duration of 2018. PA’s revenue boomed by 14%, passing £455.8 million over the course of the year.

Founded in 1943, by Englishmen Ernest Butten, Tom Kirkham and David Seymour, the firm once known as Personnel Administration has since gone on to become one of the largest consulting firms in the world. PA Consulting Group, as it is now known, has over 2,600 professionals and a global presence spanning 18 countries. While turnover took a decade to recover from a rocky spell after the global financial crisis, PA Consulting is now firmly on the upward incline.

PA has booked strong growth in recent years, following its securing of private equity investment from the Carlyle Group in 2015. While the first full year of results following that move were slightly muted, due in part to the altering of how PA measured its results, the decision has clearly paid dividends since. Revenues jumped by 6% in 2017, hitting an all-time high of £400 million in the process.

Annual consulting revenues of PA Consulting versus UK market

Now, in the latest chapter of the firm’s rapid turnaround, the innovation and transformation consultancy has revealed things only got better in 2018. A set of record results released in April have confirmed that fee income rocketed up by 14% over the course of the prior 12 months, hitting £455.8 million. Considering the UK’s consulting market saw growth slow for the second year running (just 5.6%), PA’s performance is even more pronounced, especially in its first year of full results since influential Chair Marcus Agius stood down. 

The firm is also outpacing the global consulting market. Analytics firm Statista estimates that the consulting market expanded by 4.08% in 2018. As a result of such bullish demand, PA Consulting has also bolstered its staffing, boosting its consulting team’s headcount by 10% in the space of 12 months. 

PA’s team was further strengthened with its continued acquisition campaign, which brought three new firms into the fold during 2018. Boston-based innovation company Essential Design, specialist digital service design firm We Are Friday and London-based digital insight and strategy consultancy Sparkler all became part of PA over the course of the year. PA has also announced plans to recruit 400 professionals for its new digital centre in Belfast. 

‘Not traditional’

In terms of client work, in the UK PA supported Skipping Rocks Lab to create an edible alternative to single use plastic drink packaging, and worked on a notable restructuring project at disability charity Scope. Further afield, PA helped Norwegian authorities deliver their citizen-facing digital services, while in the US and India, PA partnered with Virgin Hyperloop One to build the first new mode of transport in a century, one that hopes to revolutionise travel. It even worked with United Nations to identify the technologies most likely to contribute to the achievement of the organization's Sustainable Development Goals.

Commenting on the year’s performance, Alan Middleton, PA Consulting CEO, said, “We’re not a traditional consulting firm and we think this is key to our ongoing success and why 98% of our clients recommend us… Our people are strategists, technologists, digital experts, consultants, designers, scientists and engineers – all of whom bring real-world experience, and apply it at pace. We offer the innovation, design, digital and transformation skills that our clients need to change, fast. There’s a sense of optimism behind our purpose. And it’s a feeling that inspires our people as well as our clients.”

The existing staff of PA also enjoyed a bumper year, as it was revealed that a refinancing manoeuver at the firm was expected to land over 1,000 employee shareholders a significant pay-out. The firm’s debt, which includes vendor loan notes put in place when Carlyle purchased the firm, is set to be refinanced in a deal worth £350 million.