Expanding in Brazil, EY to invest US$10 billion worldwide in 3 years

RIO DE JANEIRO, BRAZIL – In the 2021 fiscal year ended in June, the company’s gross service revenue grew 16% in Brazil, to R$2.1 billion (US$384 million). The company approved a record investment plan of R$3 billion over 5 years, starting in 2022, mainly directed to three pillars – technology, strategy, and personnel training.

Investments in Brazil in 2021 exceeded R$360 million. In addition to these pillars, EY used the funds to buy Partners Digital, a SAP systems integrator from São Paulo, specialized in “customer experience” – a process of interaction between company and client.

“We continue to look for organic and inorganic growth opportunities [operational or by acquisition],” says EY Brazil president Luiz Sérgio Vieira. The main focus is companies with technology and systems that EY can use to increase its capacity in attending clients’ digital transformation.

According to Vieira, at the beginning of the pandemic one of the company’s concerns was that clients would contain expenses. “We built a ‘framework’ of how to tackle the crisis at its most acute moment and how to emerge from it. We showed that it was time to invest. One needs to have courage, because the moment is uncertain, the executive says. “Some stepped on the brakes, we didn’t.”

EY Brazil’s result went beyond the region. In the group’s 3 geographic areas, the lowest revenue growth in fiscal 2021 compared to 2020 was in the Americas (2.8%), reaching US$17.66 billion. “But Brazil reports in Brazilian reais and represents almost 70% of countries [in the bloc], and there is inflation in Argentina, which is not trivial,” Vieira explains.

Argentina’s inflation rate in September stood at 3.5%, which brought the neighboring country’s inter-annual rate to 52.5%, according to France Presse.

The group’s largest revenue increase in the period, in dollar terms, was in Asia-Pacific (13.8%), although with the lowest total value, at US$6.64 billion. The Europe, Middle East, India, and Africa (EMEIA) group, with a 13.8% increase, reached US$15.65 billion. In current currency, the increase was more modest – a world average of 4%, the Americas (2.9%), the EMEIA (3.8%), and Asia-Pacific (8.1%).

According to EY’s worldwide financial report released in September, group revenue stood at US$39.95 billion in fiscal year 2021, up 7.3% over the preceding fiscal year.

The fiscal year did not favor the Big Four in the Americas – the four largest global audit firms – EY, Deloitte, KPMG and PwC. PwC was stagnant in the region, affected by clients’ spending restraint at the start of the pandemic. Its sales grew only 0.1%, to US$18.3 billion. But globally, it posted a 4.9% increase to US$45.1 billion, helped by the reopening of some economies.

Deloitte reported revenues of US$50.2 billion in the fiscal year ending May 2021, up 5.5% year-on-year. The Americas region posted the highest revenue, US$25.2 billion, with a slight 0.39% decrease in the period.

According to Vieira, the United States, which greatly influences the Americas, should have a good year now due to the economic rebound. This will also benefit EY, which will be able to grow two digits in the USA, a goal that is more difficult to reach in mature markets, he says.

EY’s investments in Brazil are part of a total of US$10 billion the group will invest worldwide over the next 3 years. This includes approximately US$2 billion to improve the quality of audits. The announcement came after scandals in the sector, such as the fraud that resulted in the bankruptcy of German payment means company Wirecard.

Companies have been pressured by regulators abroad to improve their auditing processes.

Since the beginning of the pandemic, EY Brazil increased its staff by 22% – there are currently 6,700 employees. In 2021, it hired 2,700 people, 40% over the previous base. Worldwide, there are 44,000 technology professionals and 22,000 data specialists, comprising a staff of over 312,000 professionals.

Vieira highlights that the company in Brazil opened a new office in Ribeirão Preto (São Paulo), created a center of excellence in mining and another in agribusiness, expanded its technology area and created its own specific center, which will hire 1,300 people by 2024. It has also been preparing to assist customers with the upcoming 5G technology.

On another front, the company is expanding its strategic partnership to align its business with Microsoft’s cloud computing technologies. “We expect [to generate] an incremental growth opportunity of US$15 billion over the next 5 years on a global level due to the partnership,” Vieira says. The project anticipates that Microsoft will train more than 150,000 EY professionals.

According to the executive, these partnerships are key to helping in digital transformation, migrating to the cloud, and reviewing processes. For 2022, EY foresees revenues of US$5 billion as a result of these alliances, including in Brazil. “I was already expecting a wave of technology acceleration, but not as fast as it occurred.”