More departures at Scyne as former PwC consulting unit struggles to win business in shrinking market

More job cuts and a cash injection at former PwC public sector unit Scyne reflect hard times in the professional services scene. New health and homeland contracts could represent atrractive green shoots, but are they enough?

PwC sold its government consulting arm to Allegro. Pictures: REUTERS/Wolfgang Rattay/File Photo

Loss making consultancy firm Scyne Advisory, the former public sector arm of PwC Australia, has lost five per cent of its staff on top of the 10 per cent it axed earlier this year, and received $50m in fresh capital.

The Sydney-based firm now has 950 people on the payroll, down from 1000 just two months ago and 1200 at inception.

Chief executive John Ball said it had reduced 1 per cent of the workforce based on “ongoing performance management”, meaning the rest chose to resign or retire.

The latest cuts include five partners, who are known as managing directors, and a similar number of directors.

For Scyne’s private equity owner Allegro, it’s another sign that its attempt to tap the rivers of government money that used to flow to PwC is yet to succeed. So far, it’s been a costly gamble.

Far from the humbly announced purchase price of $1 in June 2023, audited documents lodged with the securities regulator show Allegro agreed to pay $16m, which was reduced to $14.3m when performance hurdles weren’t met.

Allegro then tipped $92m of cash into the newly separated company to get it running. Its disclosures show Scyne made a pre-tax loss of $81m for the period ended June 30, 2024 and its fiscal 2025 accounts are yet to be lodged.

Certainly, fees to the Big Four, being PwC, KPMG, EY and Deloitte are down from their peak. Deloitte is understood to have also just made a round of job cuts, but new names such as Nous, FTI and KordaMentha have stepped in and are vying for work as industry cleanskins.

An additional $50m of shares have been issued in Scyne, which is a common tactic for a private equity owner seeking to recapitalise a business, new documents filed to ASIC on Monday showed.

Mr Ball said money was for “targeted growth opportunities and the ongoing transformation of the organisation.”

Scyne also needs the cash because it is still struggling to win new business. Rivals say this is because many government departments still informally regard it as PwC, even though the firms were separated two years ago.

PwC’s reputation was torched when it was revealed one of its tax partners had shared confidential information provided by the government on closing loop holes for international tax avoidance.

In the two years leading up to the scandal, PwC had won $537m in Commonwealth contracts.

Just last week, the Department of Finance finalised its report into PwC, which could potentially clear the way for it being able to bid for Commonwealth work again, once its non-compete clause with Scyne expires at the end of 2025.

The report by Katy Gallagher’s office is set to be released within days.

In any case, Scyne insiders say their firm is making inroads.

It won $6m of work from the Department of Home Affairs, $3.1m from the Department of Defence, and just this month added a new contract with the Australian Submarine Agency worth $2m.

“We achieved profitability in June and this will continue strongly in July. We are budgeting for a strong positive EBITDA performance in FY26,” said Mr Ball.

The PwC tax leaks scandal put the spotlight on how many billions of taxpayer dollars are allocated to consultants and has triggered a seismic reshuffle in trust and market share.

While Deloitte, EY and KPMG still remain key contractors, the likes of Nous - a firm mostly populated by former public servants - is now winning a larger portion of the public sector pie as its relationships pay off.

Still, according to AusTender data, Scyne was the second biggest winner of Commonwealth health contracts in 2024-25 behind Nous.

The same data trove indicates consulting spend peaked under the Morrison government at $680m in the year to May 2020. The next highest was the year to May 2024, when the Albanese government incurred just over $660m of consulting bills, of which EY, KPMG and Deloitte were the first, second and third largest beneficiaries, and Nous unseated the spot held by PwC now Scyne.

Meanwhile, PwC has just sold its business restructuring division to Teneo.

Originally published as More departures at Scyne as former PwC consulting unit struggles to win business in shrinking market