TBR Talks Bonus Episode: Saudi Arabia & PwC: What does this mean for Advisory Services?

TBR Talks host Patrick Heffernan began his professional career in diplomacy, with Middle East postings as a foreign service officer with the State Department and counterterrorism assignments with the National Security Council and the U.S. Department of the Treasury. In this bonus episode of TBR Talks, Patrick gives his unique perspective on the impact of Saudi Arabia’s recent decision regarding PwC and on consulting and IT services firms. Patrick will also share insights into how Saudi Arabia may be changing the way in which it operates with global firms.

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Edited by Haley Demers

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Art by Amanda Hamilton Sy

TBR Talks Bonus Episode: Saudi Arabia & PwC: What does this mean for Advisory Services?

Saudia Arabia, IT services firms and consultancies: What’s next?

TBR Talks Host Patrick Heffernan: Hi, this is Patrick Heffernan from Technology Business Research with a special episode of the podcast because it’s not too often that my former career and my current career come together as much as they have just recently. If you looked on LinkedIn, you’ll know that I was with the federal government for 13 years, serving as a diplomat, including four years living in the Middle East. I also traveled to Saudi Arabia so many times people thought I actually lived there. 

And then this past weekend, we got the news that the Saudi Public Investment Fund had essentially frozen out PwC for a year. And so, I got a lot of questions from both my colleagues here at TBR, but then also colleagues I’ve known for a long time, people who I’ve formerly worked with. And they were asking questions about what does this really mean? 

And I think one of the mistakes that’s easy to make is to look at the story and think it’s about PwC, it really isn’t. This is a story about Saudi Arabia and the way I read this, again from my experience, having traveled extensively and having worked and lived in the Middle East, is that this is really an opportunity for the Saudi government to do two things.

One, they’re putting a shot across the bow of all the consultancies, all the others who have been looking to cash in on what seems like an endless flow of Saudi money. The Saudi government can’t simply disrupt everything and start canceling contracts willy nilly, but they can rein in some of that spending on foreign firms, in part by sending a signal that the days of free money, the days of that free cash flow all the time are really over. So essentially, they’re sending a warning to the companies that have been making a lot of money off of Saudi Arabia over the last couple of years.

The second thing is it sends a broader signal to the market and to the globe as a whole, and the investment community as a whole, about what’s happening in Saudi Arabia now around transparency and around accountability. Essentially, the Saudi government is saying we’re holding even these global accounting firms accountable. The good old days of the bazaar is over. We are now a highly functioning, highly modern economy. Now, you can take that all with a grain of salt. Although I am hearing from people in the investment community, in the insurance community, in the banking community, talking about the pressure they’re feeling to bring people to Saudi and to hire people in Saudi Arabia now, to be more local, to be more on the ground.

So clearly, there are a lot of messages that are coming from the Saudis right now. So, the bottom line for me, it’s really a mistake to read this as a simple Saudi Arabia and PwC thing. It really is a warning to all those consultancies and the IT services company that have been pouring investment money into the Middle East, into making bets on the growth of Saudi Arabia and the growth on others. And that warning is that you need to play by the local rules. And if you don’t know the local rules, just simply don’t play.

Final thoughts

So hopefully that’s a little bit of perspective based on all my experience in the Middle East and all my experience looking at big four firms from both a competitive and an ecosystem lens. If you have any questions, please feel free to reach out. Again, this is Patrick Heffernan with Technology Business Research. Thanks.

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