More Big 5 accounting firms see regional offices as a must
In the last few years, accounting firms have extended their reach outside of Warsaw to embrace other economic hot spots. There is no one city outside the capital in which all of the Big Five firms have set up shop, but many of the firms are represented in Gdańsk, Poznań, Katowice, ŁodĽ, Szczecin, Krakow and Wrocław.
Continuing that trend, PricewaterhouseCoopers is working toward opening a new branch in Wrocław imminently, said John Jeffrey, territory senior partner. At the same time, Deloitte & Touche is also considering the southwestern city of Wrocław as well as Poznań, said Lesław Paga, chairman and managing partner. And Ernst & Young opened an extension of its Katowice auditing office in Krakow recently, the first step before establishing a full office there, said Krzysztof Rytel, director of the firm's Katowice office.
"In the half-moon area (Wrocław, Katowice, Poznań and Krakow) huge investment is coming in," Jeffrey said.
Unlike the Czech Republic and Hungary, where tax and audit consulting revolves around the capitals, Poland is too big to have all such services concentrated in one city, said Deloitte's Paga.
The economic growth of the regional cities themselves prompted many firms to establish a presence, accounting partners said. The firms also often followed existing clients as they set up operations in the new cities, trying to keep the auditing and tax business they had fought so hard to win. "We always want our resources closer to the locations where our clients are," PWC's Jeffrey said.
Ernst & Young's Rytel said that one reason his firm decided to set up the Katowice office was to be closer to its clients, as more and more established their headquarters in Silesia. The firms have also found that their clients need their services more than just once a year, Deloitte's Paga said.
"The client wants someone working closely (with them) and with direct access," he said. "Audit is slowly changing in the way it is delivered. It is not a seasonal job, there are issues to deal with all the time."
The problem with expanding throughout the country, however, is that accounting firms can find it difficult to maintain control over their nationwide operations and also to remain beholden to a level of quality, said Duleep Aluwihare, managing partner at Arthur Andersen. Comparatively slow to expand against its competitors, the firm only established its first regional office in Katowice in 1997, while Poznań and Wrocław followed last year. The firm is not planning any moves in the near future, he said. The firm's caution in opening offices stemmed from a "need to ensure consistent quality in a developing market," Aluwihare said.
"If you spread out, it's more difficult to do this and ensure that operations are acting in the same way," he said.
But rising levels of foreign investment have also heavily influenced the accounting firms' decisions to move outside of Warsaw. Deloitte's move to Szczecin in the early 1990s stemmed from the large amounts of German capital that were flowing over the border and helping to grow new businesses. This was also a factor in Ernst &Young's move there, Rytel said. The high level of foreign investment in Poznań also played a decisive factor in the firm's decision to move there, he said. The firm employs separate groups of advisers to deal solely with German clients in that region, Rytel said.
Accounting firms at the outset tended to deal primarily with multinational firms when they set up shop in the other regions, executives said. In the meantime, foreigners have moved further into the market through the privatization of domestic firms, and many of the acquired Polish firms have switched over to international accounting standards and brought on a Big Five firm. Large Polish corporations, some of which are now publicly traded, have also revamped their use of accounting standards and brought on "brand name" accountants. Now smaller and medium-sized firms are joining the fray, executives said.
While Arthur Andersen came to Poznań and Wrocław to serve middle-market investors better, the firm also counted on attracting entrepreneurial businessmen moving to these cities. Many growing businesses were still not big enough to serve from Warsaw, Aluwihare said.
Opening up a new office is harder than just finding space, accountants said. It is also a question of finding qualified personnel, PWC's Jeffrey said. "The secret of finding an office in a region is finding the person who can run it, you need someone who's run (one) before," he said.
While the company had intended to open an office in Wrocław before it expanded to Gdańsk, the latter city's operations had got underway first because the firm found someone with the right qualifications and local know-how, he said.
There is a reward for the effort, though. Overall, costs as compared to hours billed tend to come down when local offices are opened, the partners said. The firms no longer have the expense of sending people out to the regions, Jeffrey said, and at the same time both office rent and salaries for professional and support staff are cheaper outside the capital.
But an even more important reward may be getting to know the client's world better, Jeffrey said. "It is a question of understanding the environment in which the client works," he said.
Continuing that trend, PricewaterhouseCoopers is working toward opening a new branch in Wrocław imminently, said John Jeffrey, territory senior partner. At the same time, Deloitte & Touche is also considering the southwestern city of Wrocław as well as Poznań, said Lesław Paga, chairman and managing partner. And Ernst & Young opened an extension of its Katowice auditing office in Krakow recently, the first step before establishing a full office there, said Krzysztof Rytel, director of the firm's Katowice office.
"In the half-moon area (Wrocław, Katowice, Poznań and Krakow) huge investment is coming in," Jeffrey said.
Unlike the Czech Republic and Hungary, where tax and audit consulting revolves around the capitals, Poland is too big to have all such services concentrated in one city, said Deloitte's Paga.
The economic growth of the regional cities themselves prompted many firms to establish a presence, accounting partners said. The firms also often followed existing clients as they set up operations in the new cities, trying to keep the auditing and tax business they had fought so hard to win. "We always want our resources closer to the locations where our clients are," PWC's Jeffrey said.
Ernst & Young's Rytel said that one reason his firm decided to set up the Katowice office was to be closer to its clients, as more and more established their headquarters in Silesia. The firms have also found that their clients need their services more than just once a year, Deloitte's Paga said.
"The client wants someone working closely (with them) and with direct access," he said. "Audit is slowly changing in the way it is delivered. It is not a seasonal job, there are issues to deal with all the time."
The problem with expanding throughout the country, however, is that accounting firms can find it difficult to maintain control over their nationwide operations and also to remain beholden to a level of quality, said Duleep Aluwihare, managing partner at Arthur Andersen. Comparatively slow to expand against its competitors, the firm only established its first regional office in Katowice in 1997, while Poznań and Wrocław followed last year. The firm is not planning any moves in the near future, he said. The firm's caution in opening offices stemmed from a "need to ensure consistent quality in a developing market," Aluwihare said.
"If you spread out, it's more difficult to do this and ensure that operations are acting in the same way," he said.
But rising levels of foreign investment have also heavily influenced the accounting firms' decisions to move outside of Warsaw. Deloitte's move to Szczecin in the early 1990s stemmed from the large amounts of German capital that were flowing over the border and helping to grow new businesses. This was also a factor in Ernst &Young's move there, Rytel said. The high level of foreign investment in Poznań also played a decisive factor in the firm's decision to move there, he said. The firm employs separate groups of advisers to deal solely with German clients in that region, Rytel said.
Accounting firms at the outset tended to deal primarily with multinational firms when they set up shop in the other regions, executives said. In the meantime, foreigners have moved further into the market through the privatization of domestic firms, and many of the acquired Polish firms have switched over to international accounting standards and brought on a Big Five firm. Large Polish corporations, some of which are now publicly traded, have also revamped their use of accounting standards and brought on "brand name" accountants. Now smaller and medium-sized firms are joining the fray, executives said.
While Arthur Andersen came to Poznań and Wrocław to serve middle-market investors better, the firm also counted on attracting entrepreneurial businessmen moving to these cities. Many growing businesses were still not big enough to serve from Warsaw, Aluwihare said.
Opening up a new office is harder than just finding space, accountants said. It is also a question of finding qualified personnel, PWC's Jeffrey said. "The secret of finding an office in a region is finding the person who can run it, you need someone who's run (one) before," he said.
While the company had intended to open an office in Wrocław before it expanded to Gdańsk, the latter city's operations had got underway first because the firm found someone with the right qualifications and local know-how, he said.
There is a reward for the effort, though. Overall, costs as compared to hours billed tend to come down when local offices are opened, the partners said. The firms no longer have the expense of sending people out to the regions, Jeffrey said, and at the same time both office rent and salaries for professional and support staff are cheaper outside the capital.
But an even more important reward may be getting to know the client's world better, Jeffrey said. "It is a question of understanding the environment in which the client works," he said.
