As a result of a conflict with Saudi Arabia’s Public Investment Fund (PIF), PricewaterhouseCoopers (PwC), one of the world’s four largest accounting firms, has been hit with a year-long ban by PIF. This has led to a significant slowdown in their operations in the Middle East, resulting in lay-offs of around 60 partners and 1,500 employees.
According to a report by the Financial Times on Friday, September 19, Saudi Arabia’s adjustment of massive expenditures over the past decade, along with reshuffling priority projects, has weakened overall consulting demand. The effective implementation of a one-year ban by PIF on PwC has exacerbated the contraction of the company’s advisory business in the region.
PIF is PwC’s largest client in the region, and the company has thus lost a significant source of revenue. Since February this year, the company has started a large-scale layoff process.
Insiders have revealed that PwC had already begun reducing staff in the Middle East and conducting performance evaluations. Following the setback with PIF, its leadership has had to reassess the substantial revenue gap for the next fiscal year.
PwC is undergoing a leadership restructuring in the Middle East. According to an email sent by Marco Amitrano, the company’s UK head, to all employees on Friday, September 19, Laura Hinton will co-lead the Middle East operations with current senior partner Hani Ashkar starting from October.
It is expected that Hinton will become the sole senior partner after a year. It is reported that five months ago, two senior executives were directly asked to resign due to the PIF ban.
PwC had been involved in mega projects with PIF, including the $500 billion Neom future city development project along the Red Sea coast. However, the company’s attempts to poach Neom’s chief internal auditor and refusal to take on audit work conflicting with certain consulting business led to “friction and dissatisfaction” with PIF, ultimately resulting in the ban.
As per data released on Wednesday, September 17, the revenue growth for PwC’s Middle East operations was only 0.4% for the fiscal year ending in June, a sharp slowdown compared to last year’s 26% growth.
The layoffs mainly targeted consulting positions in the Middle East, particularly partners and staff involved in “transformation” projects. Another source revealed that as of the end of the previous fiscal year, PwC had around 500 partners and 11,000 employees in the Middle East, mainly distributed in UAE and Saudi Arabia. Considering the business no longer being in double-digit growth, streamlining the workforce is seen as a “prudent” move.
Despite the layoffs, the overall number of employees in the region has remained relatively stable, as PwC has carried out new recruitments in fields with strong demand. The company promoted 62 new partners in June and continues to recruit extensively for junior staff, showing confidence in its expansion in the Middle East.
Insiders mention that the PIF ban has forced PwC to rethink its governance structure, “refresh the senior team,” and strengthen partner rotation.
These layoffs come as PwC is also downsizing in the UK. On Wednesday, the company admitted that overall economic slowdowns led to the layoffs. Data shows that as of June, the company had around 33,700 employees, lower than the previous year’s 36,000.