How The Big Four's Influence Has Been Growing In Government's Policy Contours

According to Consultancy.in, an online platform for the advisory and consulting industry, these big companies secured projects worth nearly Rs 450 crore from the central government between 2017 and 2022.

The government—central and states along with their departments—are now among the leading clients of the Big Four.

Besides this, it is no secret that the private sector, including these top audit firms, is rushing to hire retired bureaucrats as either independent directors or consultants in senior positions to increase their influence in policymaking and lobbying.

Project work spanned all kinds of domains, from strategy consulting and policy development, organisational support, evaluations of policy, financial due diligence, project delivery of government-led changes, and more, Consultancy.in pointed out. And now the Big Four are busy accelerating their expansion strategy.

According to information made available under the Right To Information Act, PwC, Deloitte, EY, and KPMG won at least 305 consulting assignments worth nearly Rs 500 crore from various government ministries, departments, etc in the five year period between 2017 to 2022.

Earlier this month the country's largest insurance firm, state-run LIC which manages some Rs 52 lakh crore worth of assets, brought in consultants from Kearney to help the group transform and modernise its agency ecosystem. 

In a recent interview, Deloitte’s India head Romal Shetty said that the firm is planning to double its annual revenues in the country. In 2023-24, its revenues in India crossed the Rs 10,000 crore mark. The firm clocked a growth rate of 30 per cent.

"We've doubled down on sectors like financial services and government, and invested in new sectors like semiconductors and space," he said.

Deloitte is not alone. The other biggies too have registered remarkable growth rates in the last couple of years.

However, there have been setbacks too with some departments  junking the advisory firms after reviewing their work, in favour of internal or other competing arrangements.

Recently, Goa state government terminated Boston Consultancy Group's contract to support the development of its Viksit Goa 2047 strategy after a review of what the firm had delivered. 

It's also true that the the government, along with the Institute of Chartered Accountants of India (ICAI)- the regulatory body, on their part have also been pushing homegrown Indian firms towards becoming multinational players.

However, with rich pickings within the country, few have the appetite to try their luck elsewhere navigating different regulatory regimes.

“The Big Four firms typically manage to win most of the government floated tenders and once they do that, it becomes much easier for them to grab the consultancy projects as well,” Amarjit Chopra, former president, the Institute of Chartered Accountants of India (ICAI) told The Secretariat.

“We need to chart out a roadmap to allow domestic audit firms and other consultants to become big as well,” he added. 

These firms have also come under the spotlight for providing audit and non-audit services to the same clients.

Reuters in an article in 2009 noted that the fraud at Satyam Computers Services touted as the India’s Enron, “has shaken investor confidence in the world's Big Four accounting firms, which have expanded rapidly in Asia despite a general shortage of qualified accountants.”

At that time, many experts had felt that the Big Four success story in India was over, though that never happened.

Chopra acknowledged that the Big Four are also ahead of domestic rivals in several ways as they have managed to incorporate global best practices and mechanisms in their functioning.

As per Section 144 of the Companies Act 2013, accountancy firms that act as statutory auditors to companies are barred from providing a host of other services to them.

These services include management, actuarial, and investment banking/advisory among others. However, according to Taxscan, while auditors adhere to the ICAI’s ethical code, the restriction on non-audit services lacks a clear definition.

Though these global giants started off as traditional accounting and audit service providers, they diversified and expanded their network. They play a dominant role in providing services in the field of consultancy, corporate finance and digital network among others.

Deloitte and EY each have about 1 lakh employees in India. That’s a fourth or more of their global employee strength. PwC has about 50,000 employees, whereas KPMG has over 40,000.

Finance and Corporate Affairs Minister Nirmala Sitharaman recently underscored the need to propel a domestic audit firm into the big league, which could also cater to global clients.

"You should establish a CA firm strong enough to be reckoned as a top-four company. What stops us from doing it?" Sitharaman, addressing the Bihar chapter of the ICAI in May this year, said.

There are reports, suggesting that the government may look at tweaking regulatory norms to help Indian audit firms to expand. However, sources believe that this will not be an easy task and may take years if not decades to materialise.

“To create an Indian audit firm which can compete with the Big Four and be in that league is definitely a noble thought and must be worked upon but this is not an easy taskand will perhps not be possible even in the medium term,” an insider said.