As we have been updating Global 5000 company revenue numbers for 2013, we are struck but the tail off in growth between 2012 and 2013.

These big firms were reporting strong growth in the couple of years leading up to the recession, clipping along at 13% and then 7%. The recession hit and revenue dropped by 9% in 2009. The recovery was terrific for the biggest companies in the world with 11+% growth in those ensuing recovery years.  Looking back at 2012, the Global 5000 revenue only grew by just over 3% and then nearly flat last year.

So, what happens when we see these shifts?

  • For one, there is an uptick in M&A activity which we have seen in 2014 as companies look for ways to find revenue.
  • We also see more spin-offs and divestitures as large firms focus on profitability and looking at ways to focus the company efforts on core businesses.
  • As revenues slow, there is more pressure on expenses include personnel costs and hiring slows. We see an increase in the revenue per employee as employers find other means to get the job done – technology, outsourcing, etc.
  • This leaves the mid size and smaller firms to generate most of the job growth, changing the shape of businesses.

This is, indeed, a very interesting indicator to watch.

Global 5000 Companies Annual Growth Rates