The results were striking. Despite the ravages of the Great Recession, Big Four revenues fell only 7% to US$93.8 billion last year. And that’s in U.S. dollar terms. “The decrease in local currency terms was at a much lower level, ranging from negative 3% to positive 1%,” says Big Four Blog. The group analysed publicly available financial statements and press releases issued by the four accounting firms, and estimated some numbers and ratios “due to non-availability of adequate information.”
PwC is still the world’s largest accounting firm – but barely. It had revenues of US$26.2 billion. With revenues of US$26.1 billion, Deloitte was narrowly beaten into second place. Ernst & Young had US$23 billion for third place, while KPMG reported revenues of US$20.1 billion. It’s all just bragging rights, of course. The rankings aside, the Big Four remain equally big and solid.
How Asia Performed
Billings from Asia accounted for 15% of total revenues, making it the smallest region in terms of Big Four business. Contrary to popular belief, the U.S. and the rest of the Americas are not the largest market for accountants. Europe, Middle East and Africa accounted for 45% of total revenues to 40% for the Americas.
While still small, Big Four business in the Asia Pacific is growing rapidly. Its share of revenues was only 12% in 2004. “This share gain came at the expense of the Americas region, which correspondingly lost its share of the pie,” Big Four Blog notes.
“The Asia Pacific region has been in an economic boom for most of this decade, and their demand for Big Four firm professional services have multiplied,” it adds. “All the firms have grown at exceedingly high rates each year since 2004, with the result that combined revenues have doubled from US$7 billion in 2004 to US$14 billion in 2009.”
Asia’s performance is astonishing when compared with overall global growth. The combined revenues of the Big Four firms in 2004 reached US$60 billion. Last year’s US$93.8 billion translates into growth of 56% -- still impressive, but pales in comparison with Asia Pacific’s 100% rise. With China reporting 10.7% GDP growth in 2009, demand for Big Four services in Asia is likely to rise sharply in 2010 and beyond.
Hiring and Firing
There was talk last year that the big accounting firms were asking people to go on unpaid voluntary leave and even firing employees. That appears to be overblown, judging by the reported employee numbers. “Despite the reduction in revenues, net employment grew by more than 10,000 professionals from 2008 to 2009, with Deloitte and PwC adding to their workforce,” reports Big Four Blog. But the rate of employment growth dropped sharply to 2%, from more than 10% in 2008.
“Assuming attrition rates had dropped to 10%, new hires in 2009 would be about 70,000 [people], equating to about 275 hires each day,” Big Four Blog notes. “Truly, Big Four firms are huge seekers of talent, with correspondingly very busy recruiters even in a period of deep recession.”