Deloitte Revenues Grow 1% Local Currency, Now Just Behind PricewaterhouseCoopers

 

 

Deloitte Touche Tohmatsu, the global firm, just came out with its fiscal 2009 revenues for the year ending May 31, 2009. 2009 full year global revenue was US$26.1 billion, an actual increase in local currency terms of 1%, but a drop of 4.9% in US dollar terms from 2008. The tough economic climate and appreciating US dollar were the two main factors in 2009 which impacted Deloitte as much as it did other Big Four firms. However, a 1% growth in local currency bested both

E&Y (0.2% increase in local currency http://bigfouralumni.blogspot.com/2009/09/ernst-young-external-challenges-drive.html) and

PwC (0.2% increase in local currency http://bigfouralumni.blogspot.com/2009/10/pwc-fy-2009-revenues-rise-modestly-from.html). KPMG is yet to report its 2009 results, as its year ends in September 30, 2009.

 

Despite this remarkable performance, Deloitte was unable to beat PwC to be the largest Big Four firm on the planet. Its 2009 revenues of $26.1 billion were behind PwC’s 2009 revenues of $26.2 billion by only $100 million or 0.4%. We indicated in our earlier post that a 4.5% decrease in Deloitte’s revenues in US$ terms would make it the largest among the Big4 firms. But this is only a statistical miss. By showing remarkable performance in 2009, arguably one of the toughest environments in recent memory, Deloitte has shown that it is a strong contender for the leadership position.

 

“Achieving positive growth in this exceptionally difficult economic environment was the result of close attention to the needs of clients and a strong commitment to professional excellence by our member firm professionals. Despite the tough economy, we remain focused on our vision to be the standard of excellence and will continue to invest in pursuit of this vision,” said Jim Quigley, CEO of Deloitte Touche Tohmatsu

 

By service line, Consulting was the fastest grower at 7.3% in local currency terms. In US$ terms, Consulting revenue grew 2% from $6.3 billion in 2008 to $6.5 billion in 2009. Audit was relatively flat against 2008 in local currency terms. In US$ terms, Audit shrank by 6.4% from $12.7 billion to $11.9 billion. Tax was also relatively flat against 2008 in local currency terms. In US$ terms, Tax revenues decreased by 5.5% from $6.0 billion to $5.7 billion. Financial Advisory Services revenue fell 6.1% in local currency terms, but in US$ terms, fell by 13.8% from $2.4 billion in 2008 to $2.0 billion in 2009, driven by lower M&A activity.

 

In terms of geography, Americas dropped 3.7% in US$ terms from $12.9 billion in 2008 to $12.5 billion in 2009. Europe, Middle East and Africa also dropped 9.0% in US$ terms from $11.3 billion in 2008 to $10.2 billion in 2009. Asia Pacific grew 4.7% in US$ terms from $3.2 billion in 2008 to $3.4 billion in 2009.

 

The Asia Pacific region had local currency growth of 7.6% and was the fastest-growing region for the fifth consecutive year. India grew 29.9%, Australia grew 11.5% and Japan grew 11.3% in local currency terms. Europe, Middle East, and Africa region (EMEA) grew 2% but Americas declined 1.3% in local currency. Africa, the Middle East, and Latin America and the Caribbean posted high growth of 21.3%, 15.6% and 13.7% respectively, in local currency.

 

Deloitte said that its aggregate compounded annual growth rate (CAGR) was 9.4 percent from 2005-2009 and 14.7 percent from 2005-2008, 2009 bringing an abrupt stop to a remarkable growth rate.

 

Employment at Deloitte was a bright spot, during 2009, the firm hired more than 40,000 professionals. The workforce now stands at 168,651 people globally, representing a 4.5% (7,351) increase from 161,300 in 2008. Assuming 32,649 left the firm for the net to increase, the attrition rate comes out to be 20% in 2009 (32,649/161,300).

 

Some other interesting factoids in the Deloitte report:

 

Over 75,000 Deloitte professionals are on LinkedIn

The Deloitte Global Facebook page has 11,348 fans





The Deloitte Global Twitter feed has 2,169 followers

• A typical Deloitte professional flew 14,220 kilometers in 2009
• Over 5,300 jobs were posted on any given day in 2009 on Global career websites
• 2,322 average number of job applications received any given day
• 821 average number of student applications received any given day

 

Here are our observations and analysis on this report:

 

• First, this report was quite late this year. Deloitte’s year ended May 31, 2009, which is a good 4.5 months ago. Deloitte reported much earlier in 2008, and was the first to report. Why the delay? Was it waiting for PwC results??
• Second, while near flat growth in local currency terms and decline in US$ terms was expected, nonetheless performance was quite compelling, and Deloitte has zoomed up to near PwC level, missing leadership (intentionally or unintentionally) by 0.4%. This sets up an interesting rivalry for 2010, with both firms having good chance to establish leadership. PwC’s position for the first time ever, seems a bit shaky.
• Third, emerging markets show strong growth despite tough economic conditions, validating their continuing good economic story and Deloitte’s ability to be part of that increase. Developing markets in Europe and Americas expectedly declined.
• Fourth, we applaud Deloitte’s reporting of Social Media metric, the first Big Four firm to do so. By openly declaring that more than 75,000 of its professionals are on LinkedIn, this has effectively removed the stigma of placing your profile on the world’s largest professional network. You are not looking for another job when you are on LinkedIn, you are enhancing your network. Going public with this is commendable. We invite each and every of those 75,000 Deloitte professionals to join other Big Four professionals and alumni on our Big Four Firms Alumni and Professionals group to enhance their network. Deloitte has also a strong fan base on Facebook and a nice Twitter following. We give a hearty Thumbs Up to Deloitte for being open and proud of their social media presence.

 

 

In summary, though delayed, Deloitte put up some excellent numbers, stayed a smidgeon behind PwC in revenue, and took the leadership in social media reporting.

 

KPMG is the last to report in early November, and we will then offer our 2009 Big Four Financial Performance Analysis. See our 2008 Big Four firm analysis at http://bigfouralumni.blogspot.com/2009/01/big-four-firms-combined-revenues-top.html

 

What do you think of this? Look forward to comments both from Deloitte professionals, alumni and others.