Deloitte revenues down to $2.78 billion due to consulting squeeze

A challenging Australian consulting market has seen Deloitte’s local revenues decrease by 2.4 percent to $2.78 billion over the past financial year, with the firm’s staff numbers also contracting.

Deloitte cited the extra scrutiny brought about by the PwC government tax affair as one of the factors for its decline in revenue, with the scandal coinciding with inflationary pressures and a government already eager to cut consulting costs.

Despite the overall 4 percent downturn in its consulting and advisory business, the firm is still quietly optimistic things will pick up in the back half of the year and into 2025, noting the key transactions it has made over the previous period.

“It has been a complex and challenging twelve months in the Australian professional services sector, driven by factors such as significant political and public scrutiny, economic uncertainty and the dampening of client spend,” stated Deloitte chief Adam Powick. “Despite these headwinds, I am proud of the way Deloitte has continued to lead and make a positive impact.”

Powick further noted that while some parts of the market had been challenging, including financial services and telecommunications in addition to the public sector, the firm is still experiencing strong client demand in a number of areas such as climate change, cybersecurity, data & AI, and cloud & engineering services, with the mining & metals and power & utilities sectors forwarded as stand-outs.

Although down, Deloitte’s consulting business – which has recently been re-organised – still managed to bring almost half of the firm’s revenues, at over $1.3 billion, while audit & assurance also dropped by 3 percent in adding a further $500 million. Financial advisory, tax & legal, and risk advisory were all relatively steady, each contributing between $390 million and $290 million.

Deloitte also shed some 700 jobs over the course of the year, bringing it back closer to the 13,000-mark, although it said this was mostly a matter of not responding to standard attrition rather than redundancies. Meanwhile, 70 new partners were added via recruitment and promotions, with their overall number still sitting above 1,000 (split roughly 50-50 between equity and non-equity).

As the first of the Big Four to report, the results set up a fascinating period ahead. The clear heir apparent for the local crown upon PwC’s snakes-and-ladders slide to the bottom of the pile, Deloitte now sits just about neck-and-neck with EY’s earnings in 2023, while the full extent of the damage to PwC beyond its $600 million public sector practice loss is still unknown.