Punit Renjen, Deloitte Global CEO
In conversation with The Economic Times
"Government has made right announcements, now they have to execute", says Deloitte Global CEO, Punit Renjen.
The story of Punit Renjen, the first Indian chief executive of a Big Four consultancy firm, is an inspiring one. The Rohtak-born Renjen went to study in the US on a scholarship, capitalised on a good break, excelled in his craft (M&A) and rose through the ranks after delivering results consistently. And, in February, after 98% of Deloitte partners globally validated Renjen as their leader, the 53-year-old was crowned the global chief executive of the firm.
He took over the role formally on June 1 from predecessor Barry Salzberg. In his first visit to India after taking over the reins, Renjen spoke to Sachin Dave, Moinak Mitra and Vinod Mahanta (from The Economic Times) on the changing perception on India, missionversus-money debate and his journey to the corner office.
Being a global CEO of a consultancy, you are best positioned to gauge client behaviour and their perception of India. Do you notice a change in the perception over the last 12 months?
I think there's a lot of excitement. Prime Minister (Narendra) Modi came to the US and really charmed everybody. It was quite an experience. I got a chance to meet him at the State Department and he was impressive. So, there is a renewed sense of optimism about PM Modi and finance minister (Arun) Jaitley.
Have the conversations changed about India?
India's recent growth, and now being the fastest-growing out of the BRICS, has certainly changed the conversation. They are taking a new look at India. There are heightened expectations. There's certainly a feeling that those expectations will turn into execution.
More specifically, have CEOs been asking you about the execution part of announced programmes of the Modi government?
It is still a wait-and-watch period though the government has made, I believe, the right types of announcements. Now they have to execute.
There have been talks about a global recovery which now seem dampened by the Greek crisis and Chinese slowdown. What's your take?
What is happening in the EU, particularly with Greece, is certainly impacting global sentiment. What's happening in China, what's happened geopolitically in Russia, that's having an impact. But, we feel optimistic as a firm in some of our major geographies that there is a recovery ongoing in the United States. We're very positive on that. China is still growing at 7%; India is growing. So, there are lots of positives. Low oil prices are a positive; some of the things that are happening geopolitically are positives. But it is a bit of an anxious time.
Deloitte has leveraged India as a talent base really well. Will you be hiring more in India?
Yes. We have 30,000 professionals that work under the Deloitte brand in India and, for me, India is a tremendous talent opportunity. Ten years ago, India was a cost arbitrage play. Today, it is a talent arbitrage play. It is harder to get into some of the top management institutions in India than in the US. So it is a fabulous talent arbitrage opportunity. For us, India has 30,000 professionals out of 200,000. It has grown exponentially over the last number of years. I expect that growth to continue, both to serve the Indian market and markets that are adjacent to India globally.
One of the biggest challenges for the audit firms in India is that of audit rotation. Which side of the fence are you on — firm rotation or partner rotation?
We believe that rotation by itself has had mixed results. I don't think you can point to a fact that audit rotation by itself leads to quality. There are multiple things we need to work on together and we are committed to doing that as a firm. So we are going to follow the regulators' demand after we provide our perspective. We will follow the regime that's been set up in India or in the EU around audit rotation. Over the last number of years, we have invested $500 million on audit quality (in the US).
The Big Four have diversified from accounting and auditing into a multitude of services, so there is always a fear of dilution of mission in favour of money. How are you balancing the two?
For a firm to be exceptional, it has to be led by purpose. Our purpose is to make an impact that matters. For our clients, for the investing public, for our people, for the communities that we live in and for the profession.
That is what we are guided by. It is our mission as a firm to create a tangible, measurable and attributable impact every single time we serve a client. So we are starting to ask the questions when we evaluate our partners — what type of impact did you generate for the client that you served? What type of a mentor were you? It's a completely different way of looking at purpose.
We are trying to build a purpose-led organisation. Now, I am not trying to suggest that we are perfect, but that's the central theme of our firm. With firms offering a growing bouquet of services, the chances of conflict of interest are growing. We do have a multi-disciplinary model. We do have multiple services but we are quite sophisticated as a firm in terms of adhering to strict levels of independence and making sure that our core audit capability is not compromised.
A multi-disciplinary model is actually conducive to delivering high-quality audit because audits of global enterprises are sophisticated and require capabilities that are pretty broad; technology capabilities, valuation services, tax capabilities, which is why a multi-disciplinary model is conducive to a world-class audit operation. Audit is central to who we are. It defines our brand and it will stay central to who we are.
This is being talked about in the consulting world — the face-off between the strategy firms and the Big Four. How do you see this battle?
Our consulting practice has done extremely well despite a crippling recession. And consulting services are tightly coordinated to what happens in the economy. We have busted that myth. I believe the reason why we have done well is because we have a capability to not only come up with great ideas but also implement them. So, the capability of great insight, great ideas, great strategies but then the ability to implement it is unique to us. That has been a key reason why we have outgrown the market and why we are so successful in this space. We are the biggest in the consulting space. Deloitte US is the largest part.
Which bets are you placing to make Deloitte future-ready?
There are three dimensions that you need to look at. You need to look at geographic bets because there are geographies that are growing faster and differently than every other place; there are bets around technology or future disruptions; and then, opportunities that regulations provide, globalisation provides.
For us, geographies like India, as an example, is a very important geography, a bet that we will certainly place, and are placing. Africa is another great story for us. We are also focused on China. In terms of technologies or disruptions, we are focused on cloud and what cloud does to capabilities within our clients. So, it gives us an opportunity as a firm.
For our traditional practices, like audit, leveraging innovation like artificial intelligence and automation allows us to provide more and more efficient audit but it also increases the effectiveness of the audit. We talked about the multi-disciplinary model, the fact that we have the capability to actually embed artificial intelligence and automation and machine learning into the way we deliver audits allows us to deliver high-quality and more efficient and effective audit. That's another area we're placing bets.
And then regulation and changes in regulation provide us with an opportunity because every time there's a change in regulation, our clients get impacted. So it gives us an opportunity as a firm to help our clients navigate through changes in regulation.
So, when you took over on the first day, did you set yourself a goal?
Absolutely, at a macro-level, I want our firm to be a purpose-led firm. This notion of making an impact that matters, I want that embedded in whatever we do. The outcome of that is for us to be regarded by important stakeholders — clients, regulators, the investing public — as the undisputed leaders in the profession. That's the destination that we want to get to. So that's the goal at a very macro level. At a personal level, it's like a relay race. I've been given something very precious and I'm going to run this race as fast as I possibly can.
Can you take us through your journey from Rohtak to the Deloitte corner room?
I left India on a Rotary Foundation scholarship and I started with the firm right out of college. As I progressed through the firm, I learnt a craft. What I basically do is mergers and integration type of work and I've done very fascinating work. And as I went through learning my craft, my partners gave me opportunities, my firm gave me opportunities to do different things.
I got the opportunity to lead our consulting practice in the US and then I was elected chairman by our partners, and then I was elected the global CEO. I think it's a great testament to the wonderful firm that we have that a boy from Rohtak could become global CEO. It says less about me and more about the firm.
What principles have you based your career on to have achieved this kind of success?
When I became CEO of our US member firm's consulting business, one of my partners wrote me a mail. He said it just took you 24 years to become an overnight success. And I'm often asked this question, particularly in India. I think the tenets are very simple. I've put in my work.