At Deloitte UK, partners have had an average earning of approximately £1 million for the fourth consecutive year. This, despite the Big Four company experiencing a significant slowdown in revenue growth due to a decreased demand for its consulting services. Over the past year up until May’s end, partners saw an average return of £1.01 million, a 5% decline from the previous year. The company saw a swell in equity partners from 714 to 749, which resulted in more partners sharing in the firm’s flat profit pool of £756 million.
In the UK, Deloitte stands as the only Big Four firm to report an average partner payout exceeding £1 million in the last two financial years. The firm, which includes its Swiss operations, noticed a mere 2.4% rise in revenue to £5.7 billion. This marks a steep drop from the 14% growth in the preceding 12 months. By May 2022, Deloitte had managed to increase its revenue by 10%.
The slowdown was primarily attributed to a marginal reduction in the company’s consulting division, their largest service sections, where the sales experienced a 1% dip to £1.58 billion. Increased economic hardships led corporate firms to cut down on spending on external advisory firms. Deloitte’s financial advisory department also encountered a 2% decrease in revenue over the year, as mergers and acquisitions activities witnessed a continued subdued state.
Evidently, the Big Four, which includes Deloitte, EY, PwC, and KPMG, have had a challenging year. All members of the quartet had to let go of hundreds of employees due to difficult market conditions. PwC UK reported last week that their revenues rose by 3% during the most recent financial year, while the average partner payout decreased by 5% to £862,000.
Richard Houston, Deloitte’s UK senior partner and CEO, stated, “These are robust outcomes given the challenging marketplace and adversity of the economic and geopolitical climate.” He further noted, “We, like many other businesses, were required to carefully examine our cost structure and make some tough decisions throughout this year.”
Deloitte’s revenue from audit and assurance emerged as the company’s top-performing service line, with an 8 per cent climb to £941 million over the year. Furthermore, the company’s tax and legal division reported a 3 per cent rise in sales to £1.25 billion, while risk advisory sales stagnated at £495 million.
Deloitte disclosed that it allocated £263 million for pay rises and incentives during this period. Expressing optimism for the future, Houston highlighted that the UK economy had been on an upward trend over the past year, reflecting: “Increased economic growth is anticipated, given the economic and technological hurdles being addressed cooperatively by government and businesses.”
In order to simplify and economise operations, Deloitte has begun a restructuring of its global operations. Its principal business sections will be condensed to four – audit and assurance, strategy, risk and transactions, tax and legal, and technology and transformation – from the existing five that have been operational for the past ten years.
The company’s sales growth, which was at its lowest since 2010, saw a modest 3 per cent increase to $67.2 billion. Meanwhile, employee headcount for Deloitte’s UK and Swiss branches stayed roughly the same, ending the year with 27,573 employees. © The Financial Times Limited 2024.