Indian Big4?

I am an Indian Chartered Accountant #CA

I worked with small owner-driven CA firms in #Pune

Then joined a large multinational financial / business advisory firm BDO Oman

And then worked with a #Big4 安永 in #India

Very early in my career, from a local Indian firm to a Big4, I have faced cultural challenges and adapted myself to suit the work environments in whichever setting I was thrown into.

India today has more than 96,000 CA firms, most of which are small, owner-driven offices.

All #Big4 in today’s world originated in the western countries and follow professional advisory practices based on their learnings in development countries in #USA #Europe

Even though as an outsider, a small owner-driven firm on the one side and a Big4 on the other side look like just two CA firms with some differences in size and scale, the actual mindsets and thought processes with which these two institutions are run have nothing in common.

And then there is also a hidden attitude to undervalue the importance of each other in the financial ecosystem.

#Big4 provides a number of value-adding services which the small CA firms are not capable of doing. The extensive international network and professional expertise that a Big4 can pull in for a specific project is beyond the imagination of a typical local CA firm.

However the fee structure of a Big4 is impossible to afford for an #MSME or single-owner sole proprietor or a startup founder. These small and medium enterprises have no option but to restrict their advisory to small CA firms.

And here is the catch!

Following are my personal observations… something that makes me sad as a Chartered Accountant myself.

First, most [not all] of the local CAs have a narrow mindset. They cannot think beyond the routine tax filing deadlines and boring government compliances, which have zero advisory value for a client.

Second, the gap between the complexities of responsibilities / tasks that a CA is expected to deliverVS the amount of fees paid by small clients is widening year after year, making it difficult for CAs to have peace of mind and professional contentment. ?

Third, to ensure that the client doesn’t leave them, some [not all] of these CA firms pretend that they have experience of providing value-adding services.

You want to structure a Merger or Acquisition deal, I can do that.

You want to list your company on a stock exchange, I can do that as well.

You want to bring foreign investment in India, I know FDI rules.

You want to loan an amount to your foreign subsidiary, I know FEMA regulations.

Fourth, these small CA firms face a resource challenge.

The issue in India is not unemployment.

The real issue in India is unemployability.

And CA firms also face this problem. [I have seen so many #Indian #Commerce #Graduates who cannot even pass a correct double-entry for accounting of asset depreciation.]

And if you get a good employee, he /she uses your firm as a training ground to jump to a Big4 or a corporate, who can bring a glamorous logo on your CV, can pay you much higher, can bring you a global exposure and allow you to work in a much more comfortable work environment. [I have done exactly the same thing very early in my career, so I cannot blame the employee here.]

Now between these small CA firms and large Big4s, there are a very few Indian mid-size CA firms, who are not international, who are not Big4, however they do have the capability to provide truly value-adding services. They are owner-driven, however they follow [or at least honestly attempt to follow] most of Big4 practices. They have large employee strength and offices scattered across all big cities in India.?

Indian Big4?

The present government, under the leadership of Honorable Prime Minister Narendra Modi has a clear #NationFirst agenda.

The government believes, and rightfully so, that India is best positioned today to be a leader in everything, be it international geo-politics, be it macro economic-indicators, be it infrastructure development or be it technology export.

And why not?

?- World’s 3rd largest economy by Purchasing Power Parity

- World’s 5th largest economy by Market Exchange Rates

- Consistently growing between 5% to 8% per annum over two decades

- Recipient of World’s highest foreign exchange remittance value per year

- World’s largest exporter of talent workforce in the fields of #Science #Technology #Finance

- Political stability. The same political party in full majority with the same #Leader Prime Minister for a decade

During the last few months, several meetings have taken place among the officials under the guidance of Honorable Prime Minister of India, Honorable Finance Minister as well as Corporate Affairs Minister Nirmala Sitharaman , Honorable President Ranjeet Kumar Agarwal and Honorable Vice President of #ICAI CA Charanjot Singh Nanda

Indian government is contemplating if not just one, but if #4 Indian firms can be developed at a national level who would have offices in most developed countries across the world and who can compete with the present #Big4

In my view, there are Three strategies which should be brainstormed and actively followed through simultaneously to achieve this audacious and larger-than-life mission:

1. Mergers between two CA firms should be encouraged. Bigger CA firms should be incentivised to acquire smaller CA firms across the country. Only through such consolidation, India can dream of creating 4 home grown firms to take on the giant network of present Big4s

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2. A large pool of talented finance professionals, economists and corporate governance experts resides in foreign countries. India must create an atmosphere conducive for these senior Chartered Accountants to focus on the development of Chartered Accountancy practice in India. This conducive atmosphere would obviously include a financial benefit to these Indian CAs serving in foreign countries. Additionally, they should be provided lucrative opportunities to relocate back to India and contribute with their international exposure and business network.

3. A massive effort is necessary to build India as a brand in #Accountancy and Corporate #Governance practices, same as the present government has been mostly successful in building #BrandIndia in the fields of #Technology #Culture #Aerospace

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I will be so proud to see Indian Big4s competing with Western Big4s!! ????

It needs a long-term strategy.

At least a 10-year project with dedicated teams working cohesively among Ministry of Finance, Ministry of Corporate Affairs and ICAI.

KPMG India 德勤 普华永道

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