Deloitte said Wednesday it posted record revenues of $34.2 billion globally for the fiscal year ending May 31, as demand for services at its member firms produced their fifth consecutive year of growth.
In local currency terms, the rate of growth across the member firms of the global network, Deloitte Touche Tohmatsu Limited, was 6.3 percent in fiscal year 2014. Demand for consulting was particularly strong, with growth pegged at 10.3 percent in the past fiscal year.
Strong growth also occurred in the tax and legal services area, which was up 7.7 percent, and the financial advisory practice, which grew 6.8 percent, while the enterprise risk services practice was up 4.2 percent. Deloitte also noted that its network of firms invested nearly $190 million in communities around the world to address various social and humanitarian challenges.
“We’re very proud of our results, what I consider to be strong growth that we’ve maintained during the recession and during the period of time that the world emerges from it,” said Deloitte Touche Tohmatsu Limited CEO Barry Salzberg in an interview Wednesday. “I’m very proud of five years of consecutive growth. With an aggregate revenue of $34.2 billion, and 6.7 percent growth, I walk away proud of what we were able to put on the board. I would say that we continue to see demand across all of our core businesses and all of the regions of the world.”
He noted that the Deloitte consulting practices showed the strongest growth, with over 10 percent in local currency terms, along with a strong growth rate in audit of 2.5 percent in local currency terms over the prior year.
“That growth was driven by the Americas, which had a higher growth rate in local currency of about 4 percent,” said Salzberg. “Each of our other businesses grew nicely—tax and financial advisory, and our enterprise risk services group. We’ve seen growth across all of our businesses and we’ve seen growth across all of our geographical regions, with the Americas leading 7.5 percent in local growth, with very strong growth in the United States.”
The strongest growth in the Americas occurred in Spanish-speaking Latin America (14.1 percent) and Brazil (10.6 percent).The United States, which is the largest member firm in the Deloitte network, produced particularly strong growth, led by an 11.3 percent increase in consulting.
In Europe, the Middle East and Africa (EMEA), Deloitte member firms grew by an aggregate 5.8 percent in local currency. In particular, Italy (11.5 percent), Germany (11.8 percent) and France (10.5 percent) demonstrated strong performance over fiscal year 2013. Aggregate revenues for Africa grew 17.6 percent.
“We’ve seen a very good demand and surge for our services in Europe and Africa,” said Salzberg. “Notwithstanding the difficulties that we see in the European markets, countries like Italy, Germany and France demonstrated really strong performance for us compared to the prior year. So in the aggregate when I look at our results, I’m happy with it.”
Asia Pacific member firms experienced combined growth of 4.9 percent in local currency, up from 3.1 percent in fiscal year 2013. Japan was a key contributor to regional results at 5.1 percent growth, while India and New Zealand both grew in the double digits. Deloitte noted that it continues to invest in emerging and growth markets around the globe, which grew an aggregate of 10.9 percent in fiscal 2014.
“I’m very much committed to driving services, adding value and fulfilling our professional responsibilities in what we do, particularly as we drive our audit practice forward,” said Salzberg. “That’s been our strategy and I think these results demonstrate that it’s working.”
Deloitte has been expanding its advisory practice, merging in the Monitor Group over a year ago, for example. “Our view is that there are great demand opportunities in consulting, and great opportunities for us to add value to our audit practice through our investment, both in the audit practice but in the consulting business as well, particularly in industry capabilities, in analytics and in other areas that are important to the delivery of a quality audit,” said Salzberg. “I’m bullish on our advisory services and the continuing investments that we’ve made. I’m equally as bullish on our audit practice, where we’ve made significant investments in innovation, methodology and tools that deliver an efficient and effective audit.”
Deloitte has also made a big investment in its training facility, Deloitte University, which it opened about four years ago in Westlake, Texas, and recently expanded abroad. Salzberg, who will be retiring next June after 38 years at the firm and three and a half years leading the firm globally, said he views Deloitte University as one of his legacies from the time when he led the U.S. firm. He plans to become a professor at Columbia Business School after he retires.
“The concept of learning and development and investing in employee training and development globally is something that I am personally committed to and at Deloitte,” said Salzberg. “I think that an investment of the nature that we made in Deloitte University in Texas, and the most recent investment in Deloitte University in EMEA and in India, is really important for the continuing people commitment that we have as an organization.”
Leadership Development and Transition
Salzberg has also been watching closely as the U.S. firm, Deloitte LLP, undergoes a leadership transition with the recent retirement of its CEO, Joe Echevarria, and replacement by interim CEO Frank Friedman (see Deloitte Names New CEO Frank Friedman). Echevarria plans to focus on philanthropic work, such as with President Obama’s My Brother’s Keeper initiative to provide health, educational and work opportunities for young black and Latino men.
“I watch it very closely as you would expect,” Salzberg said of the transition. “It’s an important part of our practice. Joe retired from the U.S. firm just about a month or so ago to pursue an interest in public service. Pursuant to the partnership agreement that exists in the U.S., an interim CEO was identified immediately thereafter, who is serving as CEO until the final leadership election process is concluded, which is expected in the next month or so. I will tell you, from a client perspective, from a growth perspective, from a quality perspective, we have continued to march very, very well and we have not lost one beat. I feel very good about it. I wish Joe good luck in the new endeavors, and I am thankful for his years of service.”
Salzberg looks back over his own career at Deloitte with fond memories. “First off, I’ve enjoyed every moment of it,” he said. “I will be retiring June 1, 2015. In completing 38 years of service at Deloitte, I believe that as I look back and define what I contributed to Deloitte, I think it’s a focus on clients, on our people and on society. A bunch of things that come to mind as I look back are Deloitte University, a commitment to leadership development and more broadly community and giving back to society, and helping contribute on a collaborative basis and collective efforts to societal impact related matters. Of course the growth of our organization under the 11 years of elected leadership that I’ve been able to enjoy, both in the U.S. and globally, has been stellar. When I look at what has occurred I feel very, very good about the results. I will start a new career beginning in July teaching full-time at Columbia Business School, so I feel very good about that. Consistent with my commitment to people, I’m eager to pay it forward and help young students learn about the business world and help them be successful graduates from the school in whatever endeavor they choose. I’m pretty darned exciting about it.”
He expects the firm to continue to invest in emerging markets as well as in areas such as data analytics, tax and digital technology, along with the firm’s audit practice. He also sees opportunities for further acquisitions. In addition, changes in audit regulations in the European Union requiring mandatory retendering have led to new audit clients for the firm.
“I see a great opportunity for continued acquisitions to supplement our service capabilities as we drive this strategy,” said Salzberg. “I see a continued commitment on the part of Deloitte to innovation, bot with respect to service delivery and in serving the communities in which we operate.
"It’s been a privilege to serve for the past 11-plus years as an elected leader and 38 years with Deloitte," he added. "I believe that I’ve watched the profession evolve and change and I’ve watched Deloitte steadfastly contribute to the success of its clients, to the market and to ensuring that quality is provided and that the public trust is increased. I feel good about what we’ve done, I feel good about leaving the firm at this point in good hands, and I look forward to my second chapter as a full-time college professor where I hope to pay it forward.”
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