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Deloitte has launched the biggest overhaul of its global operations in a decade as the Big Four firm seeks to cut costs and reduce organizational complexity in the face of an expected market slowdown.
Under the plan, Deloitte’s main business units will be reduced to four: audit and assurance; strategy, risk and transactions; technology and transformation; and tax and legal: among the five the company has had since 2014.
The reorganization will reduce costs across the company, a person familiar with the plan said, but added that no figure has yet been set on the savings.
Deloitte declined to comment on whether the reorganization will lead to job cuts.
One former partner said: “It’s not about the junior grades. The greatest effect will be felt at the partner level. Partners will be removed from management positions.”
Deloitte’s global chief executive, Joe Ucuzoglu, is leading the shake-up that will take a year to roll out across the more than 150 countries where the firm operates.
In an email sent Monday to Deloitte partners, Ucuzoglu said the plan would reduce the firm’s “complexity” and “free up” more of them to work with clients rather than manage staff internally. Deloitte employs approximately 455,000 people globally.
Deloitte’s global revenues rose 15% to $65 billion in its latest financial year, cementing its position as the largest of the Big Four. But after several years of rapid growth, Deloitte, EY, PwC and KPMG are preparing for a tougher 12 months as the challenging economic environment in key markets pushes companies to cut spending.
The UK consultancy market will fail to grow this year for the first time since 2020, according to a new report, which includes input from the Big Four.
Ucuzoglu’s move comes after he last year rejected the possibility of separating the audit and consultancy businesses and publicly rejected the rationale for this. Rival EY spent more than a year trying to engineer a break-up of the firm before abandoning the attempt in April last year.
Unlike a typical multinational company, the Big Four are managed as a worldwide network of partnerships linked through a global entity that defines the strategy. The global business is funded by commissions paid by local member companies.
The complex structure can make reorganizations fraught with difficulty as partners compete for influence. The reorganization was “quite a controversial topic internally,” said a former Deloitte partner.
As part of the changes, Deloitte’s consulting business, which advises companies on everything from technology to deals and also includes its tax and legal unit, will be reduced from four divisions to three. Its audit and assurance arm will remain a standalone unit.
Deloitte’s consulting, financial advisory and risk advisory divisions will be combined into two newly created business units: strategy, risk and transactions; and technology and transformation.
The first will house the mergers and acquisitions advisory services of Deloitte, which has struggled through a drought in closing deals. The technology and transformation unit will bring together its “digital transformation” services, including engineering, artificial intelligence, data and cyber, according to the email to partners, a copy of which was seen by the Financial Times.
In a bid to eliminate silos, some staff will be moved to a broader audit and assurance arm, including those working on environmental, social and governance issues.
Tax and legal will remain a stand-alone business within the new structure as Deloitte looks to benefit from the decision to keep its audit and consulting businesses together.
EY’s breakup plan failed because its leaders failed to agree on how to split the tax practice between the two halves of the company. PwC, meanwhile, has split fees between its consulting and insurance businesses in the United States.
“While some others in the market are looking to separate this function, we believe our fully integrated suite of tax and legal capabilities is a significant source of strength and differentiation and aligns with the needs of our clients,” Ucuzoglu wrote to partners,
The new facility is expected to be operational by June 2025, with member companies starting to implement it as early as June, according to the email sent to partners.
Deloitte said in a statement that the reorganization will “modernize and simplify” its strategy.