EY’s global revenue growth accelerated in the past year as the Big Four firm tried to muscle in on rival Deloitte’s territory as a big outsourcing provider to companies around the world.
The firm also benefited from strong merger and acquisition activity that boosted its deal advisory business, helping push EY’s global revenues up 4.7 per cent to $57.0bn in the year to June 30.
That compared to 4.0 per cent in the previous 12 months and outpaced Deloitte’s most recent annual growth rate of 3.8 per cent, stripping out currency fluctuations.
PwC and KPMG, the other two Big Four accounting and consulting firms, are yet to report revenues.
Raj Sharma, EY global managing partner for growth and innovation, said the results reflected a reorganisation of the 415,000-person firm that included focusing on so-called managed services, which can take over back-office, tax, finance and IT functions for clients.
While EY’s headcount grew just 2 per cent overall last year, after it cut jobs in the Americas, there was a 12 per cent increase in headcount at the global service centres and other centralised functions, including those building technology for use across the firm.
While Deloitte is the leader among the Big Four in such outsourced services, EY said its own managed services business grew 13 per cent over the past year to about $7bn. A majority of the services are sold to tax clients, covering areas such as compliance, but it also saw 20 per cent growth in managed services for clients of the consulting business, which included IT services such as cyber security.
“The outcome in managed services is the aggregation of all these things coming to life in the last six or seven months,” Sharma said.
EY Parthenon, which sells strategy and deal advice, was the fastest-growing part of EY in the past year, with revenues of $6.8bn, up 7.4 per cent in constant currency terms. The largest business, audit, was the slowest growing, up 3 per cent to $18.9bn. Tax grew 6 per cent to $13.8bn.
The firm said that helping clients implement AI helped drive growth in its consulting business, which increased revenue by 4.4 per cent to $17.4bn. Although that was slower than the previous year, the business did not decelerate as sharply as Deloitte’s consulting arm. Deloitte reported its revenue figures last month.
The Big Four, which are structured as a network of locally owned private partnerships, do not publish global profit figures, but Sharma said EY expanded profitability in the year to June.
“All our member firms have done well in that area,” he said. “That is not just because of technology, but because of the operating model changes. We have de-layered stuff. We have made our operations a lot more nimble. We are continuing to simplify.”
And he predicted EY would continue to grow its employee headcount, even as it introduced more AI into its own business.
“People growth rates wouldn’t be the same like it used to be in the past. But there will be definitely people growth.”