Make in India equivalent to Accounting Big 4

Can such an Indian dream become a reality? This vision to create an Indian equivalent to the Big4 was given by our Honourable Prime Minister Modi in 2017 at a CA Day event organised by the Institute of Chartered Accountants of India (ICAI). The said vision is a very powerful one and before we attempt to tread on that path of how it can be achieved it is worthwhile to breakdown the Big4 accounting firms to understand how they work and are structured.

Deloitte, the largest of the Big4 is headquartered in London at $64.9B, PWC is headquartered at New York and comes in second at $53.1B, EY is also headquartered out of London and is third at $49.9B; and KPMG is headquartered at Amstelveen, Netherlands is the fourth at $36B. But are each of the Big4 entities a single corporation? No. The Big4 are a network of firms representing each country in the network and even within each country there are multiple entities. So think of it as an aggregator of separate accounting firms under a common brand and quality protocols offering audit, assurance, consulting, financial advisory, risk management and tax compliance services.

So now that we know that the Big4 is not a single entity or firm as it is commonly referred to, lets go into the constituents of what it takes to build one:-

1. Capital Infusion- VC/ PE firms have got into the aggregation game in the West in a big way because to have a global presence one requires money to pump into the various network firms to acquire, scale and adopt new technologies/ better quality processes. Public listing of such networks is of course the holy grail of the VC/PE investments made.
2. Enabling Regulation- it is no surprise that 75% of the Big4 are headquartered out of Europe and more speficially London centric. The regulations in Europe enable such networks to thrive, obtain widespread professional indemnity insurance, get regulatory recognition and grow using marketing/ mergers/ IPOs.
3. Entreprenural Drive and Ethics- Many great professionals from 100s of years have striven to create thru mergers and professional ethics the current Big4 networks. A Fortune article published a list of 15 large accounting firms in 1932 where what now is the Big4 was still listed at the top. PwC has been present in India since over 150 years so there is a rich legacy of the required mix of ethics, professionalism and entrepreneurship which we in India have imbibed from the Big4.

It is amazing what is possible once we are able to unshackle the limitations of our mind. How does one start with a clean slate in a country like India to achieve what these Big4 have been doing since so many years? Heck KPMG's earliest parent company was founded in 1818 - over 2 centuries ago!! Is giving up a CA certificate of practice or membership the answer to be able to achieve the aforesaid? Is starting an India based Accounting Network and raising private Family Office/ Angel investment the answer? Will small/ medium sized accounting firms in India understand and appreciate the advantages of such a Network?

The ICAI has issued an Exposure Draft of Proposed New Model of Networking- LLP Firm Network Model on 22 May 2024 wherein upto 49% of non ICAI members are permitted in a LLP Firm Network model. However, no company under the Companies Act, 2013 or incorporated outside India is permitted to be a member of such LLP network firm. It will be interesting to see the final outcome of the said Networking Model and only time will tell whether the critical ingredient of 'Enabling Regulation' will culminate to create or break this Vision for a Make in India equivalent to Accounting Big4.