PwC tax scandal: PwC cuts hundreds as scandal, slowing economy ...
Included in the redundancies are the majority of the 78 staff who were initially set to join spin-off Scyne but were instead sent back to PwC last month.
“These are extremely difficult decisions and my thoughts are with all of those people and their families impacted by the changes we have been forced to make,” PwC Australia chief executive Kevin Burrowes said in a statement.
“While we are optimistic about the future, PwC must take pragmatic action to manage these challenges and make difficult decisions to meet the needs of its clients and to ensure the long-term success of the firm.
“In South Australia and across the rest of the country, we will continue to serve our clients with the highest degree of quality and professionalism – and we are grateful to our people for the resilience and dedication they have shown their clients.”
About 200 skilled services staff members will continue working for the firm from PwC’s Adelaide office. Scyne’s Adelaide operations have taken over some of the office space within the centre.
Mr Burrowes was in Adelaide on Wednesday to brief staff about the cuts, which were announced on the same day as the deal to create Scyne is finalised. Scyne, made up of about 100 former PwC partners and about 1300 former staff, will officially begin operating as an independent public sector-focused advisory from Monday.
Revenue in PwC’s consulting division is down 40 per cent, or $125 million, since July, at $200 million compared with $325 million at the same time last year, The Australian Financial Review has been told. On a like-for-like basis, which removes the public sector consulting business that has become Scyne, the decline is about 8 per cent.
Across the consulting sector, leaders want to urgently cut costs amid a widespread belief that the lower level of private and public sector demand in Australia will continue until at least until Easter, and possibly until the 2024-25 financial year starts in July.
The problem is particularly pronounced in Australia because the use of consultants by federal and state governments has fallen off a cliff since the extent of the PwC tax leaks scandal was revealed in May. At the same time, federal Labor has aggressively moved to cut the use of consultants and contractors as part of its policy to bring skills back into the public service.
Firm leaders are having to weigh up the hit to partner profits caused by continuing to pay staff unassigned to client projects for an extended period versus the risk that a rebound in demand will leave them short-staffed. The affected staff, for their part, are angry they have been cut loose in a difficult jobs market as the Christmas slowdown approaches.
Globally, the firms have cut staff numbers aggressively in 2023. In March, Accenture announced it would cut 19,000, or 2.5 per cent of its global workforce. This followed news that McKinsey would cut 2000, or 4 per cent, of its total workforce. In April, EY US cut 3000, or 5 per cent of its workforce, after its failed push to spin off its consulting arm, KPMG US has cut about 2700, or 7 per cent of its workforce, this year, while Deloitte has cut 1200, or 1.5 per cent of its workforce.
