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PwC’s consulting business in the Middle East, which is mainly dominated by Saudi Arabia, experienced significant growth, helping mitigate a decrease in pay for the firm’s UK partners due to rising costs affecting profits.
The average pay for partners at the UK firm, which includes its Middle East operations, was £906,000 for the 12-month period ending in June. This is a decrease of £119,000 compared to the previous year, when the sale of a business unit resulted in average takings of over £1 million.
The Middle East business saw revenues increase by approximately 40% to nearly £1.5 billion, surpassing the near-10% growth rate 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, accounting for a quarter of total revenues, to investments in Saudi Arabia and across the Middle East related to oil divestment.
The Middle East arm of the firm focuses heavily on selling consultancy services, particularly in its Saudi offices where it primarily serves government and state-owned entities, according to Ellis.
When asked about expanding PwC’s business in Saudi Arabia given the country’s human rights record, Ellis stated that as a business, they need to invest in different locations regardless of complex geopolitics. He emphasized the opportunities that arise from recruiting and providing opportunities for Saudi university graduates, including women.
Looking ahead, Ellis expressed comfort in attending a meeting between business leaders and Crown Prince Mohammed bin Salman during the prince’s potential visit to the UK later in the year. He believes it is crucial for the UK to find opportunities for foreign direct investment and that cutting off such opportunities would be counterproductive.
PwC UK reported total revenues of £5.8 billion, which includes the Middle East business, representing an 18% increase on a like-for-like basis.
Profits at the firm, employing 26,000 people in the UK, decreased from £1.5 billion to £1.3 billion. However, when the proceeds from the sale of the firm’s global mobility business in the previous financial year were excluded, profits remained relatively stable.
This stagnation in profits can be attributed to rising costs, a £100 million investment in technology, including artificial intelligence tools and related training, as well as significant pay increases provided last summer that were not matched this year. The firm also provided supplements of up to £1,500 to help lower-paid staff cope with soaring energy costs.
Consulting revenues for PwC rose by 30% to £1.7 billion. Ellis attributed this growth to companies needing to adapt to technological changes, supply chain disruptions, and inflation in order to remain relevant. He stated that companies sought the expertise of consultants to ensure their business models remain effective.
The firm’s audit and tax practices also experienced growth, with revenues increasing by almost one-fifth to £1.4 billion and £1.2 billion, respectively.
PwC’s audit unit benefited from increasing demand from companies for assurance over non-financial disclosures, retaining the lucrative HSBC mandate and winning the NatWest tender over EY.
Revenues in PwC’s deal and risk advisory business lines grew by 6%, which is below the inflation rate.
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