Our Bureau
New Delhi
In a landmark transaction that marks the first divestiture of a Big Four captive in India, KPMG’s US and UK units have jointly acquired a 33% stake in KPMG Global Services (KGS) from the Indian partnership for $210 million. The deal, announced last week, represents a significant shift in the ownership structure of one of the firm’s key global delivery centers.
KGS serves as a critical global delivery arm providing back-end and support services to 50 KPMG member firms worldwide, handling functions across audit, consulting, tax, and technology services. Prior to this transaction, KGS was equally owned by KPMG India, KPMG US, and KPMG UK International, with each holding a 33% stake.
While the Indian partnership previously managed KGS operations, control will now shift to the overseas entities following this divestiture. This change comes amid growing tensions between KPMG’s Indian practice and other geographies over client ownership, transfer pricing, and profit distribution issues that have emerged as global capability centers in India continue to expand rapidly.
For KPMG India, currently the smallest among the Big Four firms in the country and facing high attrition rates, the proceeds from this sale are expected to serve multiple strategic purposes. The firm plans to boost partner compensation to competitive market levels, create a new pool of partners, and invest in scaling up its capabilities.
Industry analysts view this move with mixed perspectives. While it provides KPMG India with an immediate cash injection to compete more aggressively with rivals EY, PwC, and Deloitte in the advisory space, it also means relinquishing a significant growth engine and future revenue streams from global projects operating out of India.
The transaction comes three years after KPMG’s ambitious “Project Himalaya” initiative, which attempted to merge its consulting, risk, and advisory divisions with KPMG UK and KPMG US. That earlier effort stalled, making this current realignment particularly noteworthy.
In FY24, KPMG India reported revenue of approximately Rs.6,400 crore (about $770 million), achieving 16-17% growth. The firm now faces the challenge of leveraging this capital infusion to strengthen its market position while navigating the implications of ceding operational control of its global delivery center.
