Susan Black, Big4.com
20 September 2010
(blog) Just in the last few days, we have had two Big Four firms talk about big job numbers. Accenture (NYSE: ACN) and Deloitte are both coincidentally talking about the magic number of 250,000 by 2015.
For Accenture, right from its website, “by 2015, Accenture it will equip 250,000 people around the world with the skills to get a job or build a business”
For Deloitte, according to the Financial Times of London, where the first reporting of this seems to have originated, “Deloitte Touche Tohmatsu, the global accounting firm, said on Monday that it would hire an average of 50,000 workers a year during the next five years as it revealed strong revenues.”. If you do the math, that’s 250,000 by 2015.
First, let’s take Accenture, this is a bold corporate citizenship initiative on the company’s part. Its “Skills to Succeed” program appears to have two parts. First, the company teams with strategic partners, educates people around the world, building skills that enable them to participate in and contribute to the economy and society. And the second part is real money – in which Accenture and the Accenture Foundations will contribute more than US$100 million over three years – in global and local giving, as well as pro bono contributions of time and Accenture employee skills – to support the company’s corporate citizenship efforts.
So how will Accenture reach its quarter-million stretch target? It appears to us there are three concurrent initiatives to help make this happen:
First, it appears that Accenture already has more than 80 Skills to Succeed initiatives running across Africa, Brazil, India, Philippines, Cambodia, Spain, United Kingdom, and the United States with a wide variety of community organizations. This is good base of achievements to date and a solid platform on which to build upon.
Second, Accenture’s own people – both its employees and a strong commitment from leadership. The company offers its employees volunteering and pro-bono opportunities and expands its impact by replicating and scaling successful initiatives. According to Roxanne Taylor, Accenture’s chief marketing & communications officer, “Professional development is at the heart of what we do. Accenture has earned a reputation for developing talent by helping our people cultivate and use their skills effectively to help solve our clients’ business problems. Now through our Skills to Succeed initiative, we are looking to help a quarter million people develop the skills and confidence to find jobs. It’s an exciting initiative that our leadership is committed to and our people are enthusiastic about.”
Third, financial commitment. Accenture Foundations will contribute more than US$100 million by the end of 2013 – in global and local giving. That’s real money and if well spent, can be wisely utilized to create platforms and infrastructures for training and skill development to enable creation of both salaried employees and entrepreneurs.
While we cannot really say whether Accenture will succeed in its goal of 250,000 jobs by 2015 (and how exactly this will be measured and tracked), the foundation of such an ambitious endeavor seems to be well thought out and in place. The three pillars outlined above should provide the impetus for Accenture, its people and its partners to realize their lofty vision – the commitment, progress and money certainly seem to be there.
Next, let’s analyze Deloitte. :Let’s start by saying that the details on the “50,000 by 2015” are quite sketchy. The Financial Times makes a brief mention about a statement that Deloitte made on Monday September 13, 2010 when it released its 2010 financial results that, “Deloitte… would hire an average of 50,000 workers a year during the next five years…”
There’s slightly more from the Guardian of the UK’s website, “The firm s existing workforce numbers 170,000, including 12,000 in Britain. Its planned hiring rate will raise this to 225,000 by 2015.”
There’s nothing we could find in the official Deloitte press release or from a special Deloitte statement or from the US papers or website on this. But be that as it may.
Doing the simple math leads to an incorrect conclusion in our opinion. If you simply multiply 50,000 by 5 to get 250,000 and then add that to Deloitte’s current employee level of 170,000, you end up with 420,000 employees in 2015. That’s an enormous number by any standards and even when you compare it to the almost 600,000 that work in all the Big Four accounting firms today.
What’s the catch – we think it is attrition. Yes, people do leave the Big Four firms, and in large numbers too, whether it is voluntarily or involuntarily. The attrition rate for the pre-recession years has been around 15-17%, though it did drop, we think to around 10% when the job situation outside the Big Four was not that robust in the height of the recession.
Assume that the next five years are going to be pretty good, and the attrition rate is back to the estimated 16%, and that we start with 170,000 folks at the end of 2010 and hire 50,000 each year for the next five years, we arrive at 253,000 employees by the end of 2015. But that doesn’t compute with the 225,000 that the Guardian indicates. So the 16% must be not right. Using 20% as the attrition rate (based on beginning number of employees) actually gets us to 224,000 by the end of 2105. But 20% does seem high.
So either, the Guardian is not estimating the end number correctly or the attrition rate is just too high for our comfort.
Clearly, Deloitte is growing enormously in emerging markets, and quite likely may become the largest accounting firm in this year itself (that is, if pwc grows smaller than 1.7% in revenues from 2009 to 2010), so the 50,000 number looks high but potentially believable.
But the disconnects that we are seeing in the ending 2015 figure and/or the too-high attrition rate, compounded by the absence of solid sources, makes this just a bit hard, at least for us, to connect the dots. (blog)