The results are in and Deloitte has ousted PwC from the top of the global accountancy pile.
Deloitte has returned to the top of the ranking table this year while the smaller global accountancy groupings are shrinking and the bigger have continued to grow, according to International Accounting Bulletin’s (IAB) latest world survey released this week.
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Deloitte overtook PwC at the top of the table by a margin of $904m, with fee income of $36.8bn in the year to 31 May 2016. PwC reported $35.9bn in the year to 30 June 2016, losing the top spot it had snatched in the previous year.
Ranked fourth, KPMG, who had fallen behind the other Big Four — made up of Deloitte, PwC, KPMG and EY — in the last two years, is back on the growth path –reporting a four percent increase in fee income up to $25.4bn.
To turn around its fortune KPMG has been increasingly and aggressively targeting the middle market, a strategy not unique to KPMG but followed by all the Big Four.
As a consequence, they have seen their combined market share increase (climbing to 66.6 percent) while the top six mid-tier networks have seen their combined market share decrease, according to IAB data.
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By GlobalDataIn the associations’ rankings, nearly all the participants in the lower half of the table reported a decrease in fee income, suggesting struggling times ahead for the smaller players whose resilience might be at risk without a critical mass and a truly global presence.
A difficult road ahead for smaller firms
Speaking at an off the record event in London on the results of the International Accounting Bulletin’s latest world survey, accountancy chief execs and senior managers said the smaller players will find it harder to survive in the coming year.
They’re expecting further consolidation in the accountancy market both for networks and associations — the two primary accountancy business models.
Looking ahead, CEOs and COOs expect technology and recruitment to be top of their agenda.
As advances in technology transform the accountancy profession through greater automation, accountants’ role become less one of a compliant officer and more of a strategic adviser.
Today’s investments in technology are key to the long term success of accounting firms.
The evolving role of accountants also means that firms now need to recruit staff from a wider range of profiles and skills, beyond trainee accountants; firms are looking at engineers, IT specialist and others.
The war on talent is fierce amongst firms, because not only do they have to compete between themselves, they are also competing with other sectors.
The challenge is exacerbated by the younger generations’s approach to work, as one of the round table participants putted it: “If you think of the Big Four, for example, and Google, to take another example, at which of the two would a millennial prefer to work?”
Round table participants also voiced their concerns with regards to the marco-economic environment.
The result of the referendum in the UK on EU membership, as well as the US presidential election, political turmoil in Latin America and the tax scandals following massive leaks such as the Panama Papers, have further increased the uncertainty and volatility in the market for 2017, they said unanimously.
With key elections in France and Germany in the coming year, they expect uncertainty and volatility to continue to be the norm.
Further world survey data and analysis can be found on International Accounting Bulletin
