Getting Fit For The Future
PwC Partners-Up For Recovery. “This is one of the most significant investments we have made in recent years”, says Northern Ireland managing partner Hugh Crossey as he ticks off the names of nine new partners.
In the midst of the deepest economic downturn since the 1930s it takes confidence, and maybe even a touch of the crystal ball, to make a substantial investment in new senior management but Crossey is undeterred. “There's an understandable media and business focus on how challenging things are today, but we need to start focusing on tomorrow and getting the economy fit for the future.”
Confidence indeed, from the man who heads up the largest business advisory practice in Northern Ireland and which has become much more than just another local accountancy firm. With nearly a quarter of revenues coming from export markets, PwC in Northern Ireland now boasts clients as diverse as the City of New York and the World Economic Forum in Davos, Switzerland.
But however resilient niche markets in the US or Europe might be, it's the Northern Ireland public and private sectors that remain the firm's priority and Hugh Crossey acknowledges that servicing anticipated demand at home underpins his people policy. “Announcing two new equity partners and seven associate partners on the same day is a signal of our belief and confidence in the needs of our clients in the next number of years.”
Crossey explains the investment in partner-level people by highlighting that the recession is placing new and different pressures on public and private clients. “Our analysis suggests that the market is less focused on volume demand for generic services and more concerned with specific problems and opportunities that need specialist and technical skills. We anticipate that demand for high-level specialists will increase in a post-recession recovery; and that's why we are investing in more senior people now.”
Ian McConnell and Steve Smith, PwCs new equity partners, represent the different opportunities PwC believes are emerging. McConnell, who already heads up PwC's 40-strong Northern Ireland Forensic Services team now makes partner, reflecting the growing volume of commercial disputes, fraud and regulatory breaches - and the business community's increasing determination to deal with them. Steve Smith comes from the Birmingham office and brings a wealth of corporate tax experience with SME private sector clients.
Forensic accounting partner, Ian McConnell, argues that the market is changing fast. “Economic crime costs the UK public and private sector organisations a staggering £14 billion a year and 40 per cent of Northern Ireland's public and private sector organisations admitted to PwC's last Economic Crime Survey that they had been victims.”
McConnell says technology and opportunity may have empowered cybercriminals and fraudsters but the recession is uncovering them. “Economic crime is booming and most of the high profile frauds that are making headlines pre-date the credit crunch. But they only came to light when victim organisations began taking a closer look at their systems because of the current economic and trading climate.”
An explosion in demand for forensic accounting and investigations from clients throughout Europe has seen the NI PwC specialist forensic team grow to over 40 specialists, backed by their own Belfast-based forensic technology laboratory and a raft of new technology solutions.
Almost at the other end of the accounting spectrum, Steve Smith is driving a fast-growing and increasingly complex corporate tax team, where the recession is focusing clients' minds on increased efficiency, cost reduction and harnessing the most effective corporate tax solutions. “An increasing percentage of owner-managed and family businesses now look on tax efficiency as a performance indicator and not as mere regulatory compliance.”
He says that with growing pressures on revenues and margins, clients are discovering that they can actually boost profitability by improved tax planning. “This recession is driving planning up the boardroom agenda.”
Smith continues, “While it is vital to right-size your business today, it is equally important to invest in new capability and skills now to put your company in a position to exploit new opportunities as they arise.”
PwC contends that investing in new top management makes them and their clients fit for the future, but what does that future hold? Hugh Crossey says the runes offer mixed fortunes. “The pace of decline in the manufacturing and services sectors is slowing and we are hopeful that the Northern Ireland economy could be set for very modest growth in 2010.”
However, he warns that while the worst of the downturn may be past, the legacy of recession will remain. “The immediate future will see unemployment continuing to rise with job opportunities for graduate and school-leavers greatly reduced.”
Hugh Crossey also warns that getting unemployment back to pre-2006 levels will prove a long-term challenge. “With consumer spending and public expenditure both growing slowly, economic growth will rely on exports and investment and these may not increase as quickly as we would like. And with public expenditure growing at much lower rates compared to the previous decade, the Executive faces hard choices while the private sector must become much more self reliant.”
PwC's short-term messages for the public and private sector are all around recovery strategies for a landscape that will look very different to that of pre-2007.
Hugh Crossey says that with unprecedented levels of public debt and a growing competitiveness gap between developed and developing countries, getting fit for the future is about learning some new rules. “The public sector will be faced with delivering more and improved services with less money, so tinkering with existing structures simply won't work. And to deliver real wealth creation, the private sector will have to look to new business models focused around exports, innovation and aggressive tax, people and cost management.”
Crossey says the medium-term business environment will be very different to pre-recession conditions. “We are moving towards an increasingly-regulated, cost-focused and export-driven competitive market where traditional one-size-fits-all solutions will be relegated to commodity products.”
He says tomorrow's market leaders will deliver more complex and integrated value-added solutions to larger and more focused public and private sector organisations. “And that's precisely why we are investing in senior people today. Getting the right people with the right skills in the right place, and doing it now, means we can face the future, confident that we are fit and ready to realise whatever opportunities emerge for our clients and ourselves.”
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