Deloitte is reportedly initiating the most significant overhaul of its global operations in ten years as the Big Four firm aims to streamline costs and simplify the organization in anticipation of a potential market slowdown.
According to reports, Deloitte will consolidate its primary business units into four categories—audit and assurance; strategy, risk, and transactions; technology and transformation; and tax and legal—down from the five units it has operated since 2014.
Although specific figures on cost savings have not been disclosed, sources familiar with the plan suggest that the reorganization will yield cost reductions across the firm.
Joe Ucuzoglu, Deloitte’s global CEO, is leading the restructuring efforts, which are projected to take about a year to implement across the firm’s presence in over 150 countries.
In a communication to Deloitte partners, Ucuzoglu highlighted that the plan aims to simplify the firm’s structure, allowing more partners to engage directly with clients rather than being tied up with internal management. Deloitte has a global workforce of approximately 455,000 employees.
While Deloitte experienced a 15% increase in global revenues to $65 billion in the last financial year, the firm, along with EY, PwC, and KPMG, anticipates a challenging period ahead due to economic uncertainties prompting companies to curtail spending.
The restructuring move by Ucuzoglu follows his rejection last year of the possibility of splitting Deloitte’s audit and consulting businesses, a strategy pursued by rival EY before being abandoned in April last year.
Unlike conventional multinational corporations, the Big Four operate as a network of partnerships interconnected through a global entity that sets overarching strategies, with funding derived from fees paid by local member firms.
The reorganization, however, is anticipated to face internal challenges as partners vie for influence within the complex structure.
As part of the restructuring, Deloitte’s advisory businesses will be streamlined into three divisions, with its audit and assurance arm remaining independent. The consulting, financial advisory, and risk advisory divisions will be consolidated into two newly formed units: strategy, risk, and transactions; and technology and transformation.
Efforts will be made to eliminate operational silos, with some staff being reassigned to bolster the audit and assurance arm, particularly in areas such as environmental, social, and governance.
Tax and legal services will continue as a separate entity within the new structure, reflecting Deloitte’s decision to maintain the integration of its audit and consulting arms.
The new organizational framework is expected to be fully implemented by June 2025, with member firms initiating the transition process as early as June, as communicated to partners.
Tobi Adetunji; From the News Source: Techeconomy
