Deloitte forecasts double digit growth 

deloitte's logo on wall

Deloitte’s new chief executive Cindy Hook is forecasting double digit revenue growth for the 12 months to May 31, as she repositions the professional services giant to be more globally oriented to capture emerging markets, and meet the demands of domestic clients expanding offshore.

Reflecting on her first year in the job, Ms Hook, who oversees a workforce of roughly 6000 staff in Australia, said being globally integrated is a top priority, but won’t distract the professional services giant from continued growth in its domestic market.

With sales of $1.3 billion, Deloitte Australia is the second largest of the country’s so-called Big Four accountancy firms, which include PricewaterhouseCoopers, Ernst&Young and KPMG.

These days, about half of the revenue earned by this quartet comes from broad based consulting rather than core tax, audit and accounting.

Deloitte SA boss, Jody Burton has been promoted to chief risk officer as part of a leadership reshuffle.

Just over 75 per cent of Deloitte’s revenue growth this financial year will be generated internally. Deloitte has bought four businesses this year so far, and hopes to buy another two before year end.

“We are only credible globally if we’re strong in Australia. If the business here ever falls off, we will lose that credibility. Likewise, if we’re not global, we will miss opportunities,” she told The Australian Financial Review.

She said the acquisitions will be in niche consulting areas.

NEW LEADERSHIP

Deloitte's goal, like many of its peers, is to build businesses that scale without staff.

Deloitte has reshuffled its senior leadership ranks, promoting former head of risk Andrew Griffiths to chief financial officer.

South Australian office managing partner Jody Burton will take over the chief risk officer role, increasing the number of women on Deloitte’s senior executive team to three out of 13.

Mr Griffiths was the lead client partner on Deloitte’s prize Woolworths account. His immediate mandate is to scrutinise Deloitte’s finance, technology and property investments.

John Meacock has been named chief strategy officer for Asia Pacific, while financial advisory leader Ian Thatcher – the brains behind bringing Access Economics into Deloitte back in 2011 – has been appointed deputy chief executive officer for Asia Pacific.

“This puts Australia right at the table as we strive to work more closely across the region,” Ms Hook said.

GOING GLOBAL

Deloitte is not alone in resetting its orientation. Global integration has become a strategic issue for legal, engineering, management consulting, and accounting firms alike.

A decade ago, the top 50 multinational corporations, such General Electric and McDonalds, cared how service providers worked across geographies. But there weren’t that many of them, so it was not a huge priority for professional services firms.

“Today, mid-sized businesses are going global and that trend is going to continue,” Ms Hook said.

Ensuring the Australian firm is connected globally is as much about the free flow of intellectual property back and forth between sister firms in the Deloitte network as it is about producing a consistent client experience.

Emerging markets are looking to countries like Australia for skills transfer.

“We’ve got capability and they’ve got market opportunity,” Ms Hook said.

“Australia is known within the Deloitte network as having broad capability across advisory, especially in digital. They don’t have the same capability yet.”

Deloitte’s new training academy on the Singapore island resort of Sentosa had its inaugural regional partner gathering in February, in an effort to increase collaboration and consistency across regions.

Deloitte has invested close to $US350 million in two academies in Singapore and Europe to get uniformity across its 225,000 global workforce and increase the mobility of practitioners and work packets.

SCALE WITHOUT STAFF

Ms Hook said Deloitte’s appetite to acquire more mid-sized accounting practices has waned.

Its Deloitte Private Connect platform, which is the hub for all its private clients offerings, has achieved enough scale through its acquisition of Moore Stephens’ western Sydney practice and GMK in Melbourne.

It is now focused on signing up franchises, such as Prime Dental, who are looking for more transparency and control over their networks.

Officially launched two years ago, Deloitte Private Connect was Deloitte’s first “platform based business”. Platforms are something of a nivarna in professional services.

Historically, professional services firms have scaled revenue almost in direct correlation to headcount.

It is widely held view that this model is unsustainable in the long-run, particularly when salaries are increasing faster than charge out rates.

Deloitte’s goal, like many of its peers, is to build businesses that scale without staff.

“It’s not eliminating jobs because you still need people to run and build these platforms. The idea that you’re getting rid of people is completely wrong, it’s just different sorts of people,: Ms Hook said.

Increasing the number of platform based businesses, beyond private clients and cyber, is a key prong in Deloitte’s 2020 growth strategy.

Source: AFR

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