PwC Australia slashes 400 jobs in $100m cost-cutting drive

The broader consulting market has been hit by a reduction in private sector demand due to the slowdown in M&A activity and companies reducing their spend on external advisory services. Industry insiders who had originally hoped that the private sector market would pick up by Easter are now not expecting an uptick until August at the earliest.

At the same time, the public sector market for advisory services has also suffered a downturn due to the political fallout of the PwC leaks matter and a federal government push to reduce the use of consultants and contractors.

PwC is not directly affected by the public sector demand slowdown as it no longer supplies services to the sector after selling its government consulting business to Allegro Funds for just $1 last year.

The firesale was made after PwC was cut off from winning new Commonwealth work when the extent of the tax leaks scandal was revealed. Allegro created a new firm called Scyne to target government work comprising about 100 former PwC partners and about 1200 former staff.

The Australian Financial Review has been told that PwC is attempting to cut $100 million in ongoing costs from the firm’s operations. That indicates that Project Maple, which is examining every area of the firm’s operations, will also involve other sweeping cost cutting measures and leaves open the possibility of further job cuts at a later stage.

The difficult market conditions mean that partner profits are also likely to be further hit this financial year.

The overall aim of the restructure is to simplify the business as it rebuilds its reputation following the leaks scandal.

PwC insiders said that PwC Australia CEO Kevin Burrowes foreshadowed the cuts during a firm wide webcast on February 15. When asked about potential staff cuts, he confirmed that the firm had been examining how the firm would look in the future.

Mr Burrowes was brought in by PwC global to take control of the scandal-hit Australian firm last year and has been putting in place a wide scale culture and governance reform plan.

In late February, he had his leadership term extended until 2026.

At the time Mr Burrowes, who earns $2.8 million a year, said he had “made significant progress” on a reform program of the local operation, but that there was “more work to be done”.

“The change we are pursuing won’t happen overnight. It requires hard work and commitment to ensure the cultural shifts and structural changes are embedded for the long term,” Mr Burrowes said at the time.

PwC declined to comment.