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A boom in PwC’s Saudi-dominated consulting business in the Middle East helped the Big Four firm’s UK partners avoid a significant drop in pay last year as rising costs dented profits.
Partners in the UK firm, which encompasses its Middle East operations, were paid an average of £906,000 for the 12 months to June, down £119,000 from the previous year when a windfall from the sale of a business unit propelled their average takings to more than £1mn.
Revenues at the Middle East business rose by about 40 per cent to nearly £1.5bn, the firm said, dwarfing the near-10 per cent growth in the UK.
Kevin Ellis, chair and senior partner of the UK and Middle East firm, attributed the rapid growth in the Middle East business, which accounted for a quarter of total revenues, to “the investment in places like Saudi and across the Middle East in oil divestment”.
The Middle East arm is more heavily focused on selling consultancy services, including in its Saudi offices where it mainly serves government and state-owned entities, Ellis said.
Asked whether he was comfortable expanding PwC’s business in Saudi Arabia, given the country’s human rights record, Ellis said: “As a country and as a business you’ve got to invest somewhere and the geopolitics is complex. And if you rule every country out with different views, we’ll cut off the opportunities.”
“We can recruit 350 people from Saudi universities, half of whom are women, and we provide them with opportunities (and) independence in a way that, if you asked them, they’re very positive about.”
Ahead of Crown Prince Mohammed bin Salman’s potential visit to the UK later this year, Ellis said he would be comfortable attending a meeting between business leaders and the Crown Prince if one were convened during the trip.
“We’re a big business in the Middle East. And as a country, the UK needs to find . . . opportunities for foreign direct investment, so I don’t think we’d cut off our nose to spite our face,” said Ellis, who is due to retire from PwC in June after serving the maximum eight years as UK boss.
PwC UK reported total revenues of £5.8bn, including the Middle East business — an 18 per cent increase on a like-for-like basis.
Profits at the firm, which employs 26,000 people in the UK, dropped from £1.5bn to £1.3bn but were almost flat when the proceeds of the sale of the firm’s global mobility business in the previous financial year were stripped out.
This stagnation was a result of rising costs and a £100mn investment in technology, including artificial intelligence tools, and related training. It also handed out big pay rises last summer, which were not matched this year, as well as supplements of up to £1,500 to help staff on lower salaries with soaring energy costs.
Consulting revenues rose 30 per cent to £1.7bn, which Ellis said was a reflection of companies moving to adapt in the face of technological changes, supply chain upheaval and inflation. Companies were spending on consultants because of the risk that failure to adapt would make their business models “irrelevant”, he said.
The firm’s audit and tax practices each increased revenues by almost one-fifth to £1.4bn and £1.2bn respectively.
Large companies have complained about the rising cost of having the Big Four sign off on their accounts but PwC’s audit unit, which in the past year retained the lucrative HSBC mandate and beat EY to the NatWest tender, benefited from increasing demand from companies for assurance over non-financial disclosures, Ellis said.
Revenues in the firm’s two smallest business lines — deal and risk advisory — each grew at a below-inflation rate of 6 per cent.