Big four professional services firms see big growth post Covid-19

Tech adoption by businesses, rise of unicorns, M&A activity drive gains

The big four professional services firms -- EY, KPMG, PricewaterhouseCoopers (PwC), and Deloitte -- have registered one of their strongest growth years, with the months just after the pandemic started presaging it.

This was driven by a rapid adoption of technology by businesses; hectic activity in transactions, mergers, and acquisitions (M&As); and the rise of unicorns.

“We are seeing a real resurgence in growth after the first two waves of the pandemic. The pent-up demand has come back. We see this growth being sustained,” said Arun M Kumar, chairman and chief executive officer (CEO), KPMG India.

While consulting and financial advisories have been among the biggest factors in growth, the business of the big four has increased, from audit and tax to risk advisory services.

According to industry estimates, growth has been in high double-digits -- above 20 per cent -- so far this year.

“It has been one of the strongest years for professional services firms globally and particularly in India. It has been a great bounce-back,” Rajiv Memani, chairman and CEO, EY India.

A big theme has been the use of technology and artificial intelligence, with the pandemic leaving companies with no option but to adopt them.

“Artificial intelligence has become a priority in every boardroom now. Three years ago conversations were more theoretical,” a partner in Deloitte India said.

For instance, last year a promoter-driven tyre company engaged the service of Deloitte to use an analytics engine tool for predicting rubber prices.

Firms are seeing a change in the client mindset during the pandemic. Many want to use technology not just for building resilient supply chains but also reducing risks, optimising their performance, and creating new lines of services.

“All our services will have to have elements of digital and analytics,” Kumar said.

Tech aside, with the markets at an all-time high, initial public offerings and M&As have added to the good fortunes of professional services firms and so has the rise in the number of unicorns. Firms say this is the most active time for deals they are seeing.

Hiring at an all-time high

If the business is buzzing, so is hiring at the big four at all levels, though it was driven primarily by tech demand. This trend is expected to continue over the next few years, according to experts.

PwC India, for instance, intends to add over 10,000 people in the next five years to its workforce of over 15,000.

“Our talent acquisitions are across the breadth of our offers, including cloud, digital, cyber, emerging technologies, and analytics. This will be in the form of lateral recruitments and significant campus hires in specific areas,” said Vivek Prasad, partner and leader (markets), PwC India.

For KPMG, campus hiring was two times the pre-pandemic level this year.

By the end of this financial year, EY will have hired over 30,000 professionals.

Deloitte has hired over 6,000 people in the past 12 months and plans to continue taking more on board as its work expands.

The firms face the problem of attrition, which saw a spike following the pandemic.

Challenges ahead

All the big four have listed finding talent as their biggest challenge in the coming months. 

Competition is also with specialists, forensic firms, and IT services.

“As one increases the remit of the services one sees more and more competition from other places,” the senior expert added. 

While the audit business alongside other verticals has grown, regulatory challenges for these services could persist.

Industry experts point out the audit profession has too many regulators and it could become unwieldy.

“We have to build an enabling regulatory environment rather than a punitive route. It needs to be streamlined to have greater predictability for the profession,” a senior industry executive said.

The firms say they could do a thousand audits right, but if one goes wrong it becomes big news.