The Saudi Public Investment Fund has suspended PwC from advisory work for one year without providing a reason. This decision follows PwC’s establishment of a regional headquarters in Saudi Arabia, where it has seen significant revenue growth. However, the consulting sector is facing challenges due to reduced global demand and economic uncertainties.
The Public Investment Fund (PIF) of Saudi Arabia has chosen to suspend PwC from advisory services for a year, although it has not disclosed the reasons behind this decision. The PIF’s representatives have refrained from commenting, and requests for statements from PwC’s spokesperson have gone unanswered. This suspension arrives two years post PwC’s establishment of its regional headquarters in Saudi Arabia, where it employs over 2,000 individuals in cities such as Riyadh and Jeddah, among others.
PwC’s range of services outside of auditing includes mergers and acquisitions, tax advisory, strategy, and consulting work. In its most recent fiscal year, PwC reported that the Middle East emerged as the fastest-growing region within PwC UK, indicating its substantial contribution to the company’s overall performance. Despite the pending suspension, the Middle East generated £1.97 billion ($2.5 billion) in revenue for PwC in the twelve months preceding June 30, marking a 26% increase from the previous year.
The PIF plays a critical role in Saudi Arabia’s Vision 2030 transformation plan, backing approximately 100 portfolio companies, which includes both Neom, a significant investment of $1.5 trillion, and other major projects aimed at turning historic sites into tourist-friendly destinations. This investment has been vital for the consulting sector, which is currently experiencing an extended downturn.
As reported, PwC noted a slowdown in global growth expected for 2024, influenced by reduced demand for consulting services, particularly affecting its branches in Australia and China. Competitors in the sector are experiencing similar challenges, highlighting a shift in the consulting landscape. Despite these challenges, organizations are hopeful for recovery in the Middle East, which boasts strong profitability for firms such as McKinsey & Co. and Boston Consulting Group.
The suspension of PwC by the Saudi Public Investment Fund for a year highlights significant shifts in the advisory landscape amid ongoing economic transformations in the region. While the Middle East has demonstrated substantial revenue growth for PwC, external factors affecting global demand for consulting services loom, suggesting potential challenges ahead for the firm and the industry overall. The PIF’s pivotal role in driving the Saudi economy forward remains evident as it continues to push for extensive development under Vision 2030.
Original Source: m.economictimes.com
