Pieris Markou: New Markets, New strategies, New systems

Pieris Markou, CEO of Deloitte Cyprus, talks about the trends and challenges facing accounting firms’ two main service lines – advisory/consulting and auditing/taxation – and the challenge of attracting and retaining talent, as well as the imperative need to revamp Cyprus’ tax system.

Outside the windows of the large, modern 10th floor office of Deloitte Cyprus CEO Pieris Markou, a few clouds paint the clear blue sky with strokes of white. The office contains three pieces of art: an installation called ‘The Rescue’, a contemporary painting, devoid of form, by Greek artist Kostis Georgiou and, revealing perhaps a more passionate side of the man behind the desk, a framed, signed Arsenal shirt from the team’s 2003-2004 “invincibles” season. Markou is talking about the business scene 20 years after his favourite team’s stunning achievement.

“For two years, a lot of businesses were held back due to COVID-19 in terms of their expansion plans and investments but, following the easing of the pandemic, we saw them coming back with new strategies,” he says.

Indeed, the pressing need to digitalise processes has persisted since the business world put the pandemic in the rear-view mirror, with companies knocking on Deloitte’s door seeking advice on their investment plans. At the same time, Cyprus has become ground zero for many of the multinational tech companies forced out of Ukraine, Belarus and Russia due to the war and needing an intermediary to untangle the bureaucratic web of registering an office and recruiting people. The reopening of the economy had also given a renewed impetus to M&A deals and, most prominently, Deloitte Cyprus was involved in the acquisition of the Aretaeio and Apollonion private hospitals by US-based private equity firm CVC. Markou says, “This was a result of holding back a couple of years because of the uncertainty the pandemic created. Obviously now, with inflationary pressures at work, there is also a level of uncertainty and we are again seeing a bit of a slowdown in terms of the transactions that require advisory services.”

I ask, “If we compare the two crises, which brought about a greater amount of disquietude?”

Markou takes a deep breath to collect his thoughts. “I think that the pandemic was more of an issue. People had to completely change the way they do business, while now it’s more about controlling costs and defending certain positions,” he explains.

With high inflation seemingly coming under control and concerns about a devastating recession being largely assuaged, businesses have once again started looking at the future with confidence and strategic intent. Nonetheless, Cyprus’ business reality, and in particular the professional services sector, has been seriously impacted by Russia’s invasion of Ukraine, since the West’s response via the financial warfare of sanctions meant Deloitte Cyprus and the other Big Four firms were forced to drop a significant number of clients.

“We are looking into new markets,” Markou notes. “It is taking time, but there is hope.”

“Are you a ‘glass full’ kind of guy?” I ask.

He laughs. “Yes. Generally, I’m an optimistic person,” he says.

It would appear that he has every reason to be. There is clearly a great deal of demand for the type of services that Deloitte and its competitors offer from the countries of the Middle East, as well as from the US and Western Europe. The natural gas finds in Cyprus’ Exclusive Economic Zone – in September 2022, the partners in the Aphrodite field announced a US$192 investment in further exploration – have been a magnet for companies operating in the oil and gas exploration market. Markou notes that conversations with these multinational companies have revealed that they prefer to see the families of their employees in an EU location with the well-being and comforts that Cyprus can offer, compared to Dubai, which is very expensive, or Egypt or Israel that may not be a safe environment.

“From a Cyprus point of view,” he adds, “we are investing more in making the country an attractive business centre, and not just for tax purposes. Tax is old news – you need to make sure it is not a burden on the business but you need to offer so much more to an international investor, whether that means schools, infrastructure, or the quality of services, which includes those provided by the public sector.”

He goes on to recall how, “a few years ago, you could not make a tax payment unless you visited the tax office and queued up to hand over a cheque. Cyprus was supposed to be a centre for international business and you could not make a tax payment remotely!”

Despite significant improvements to remove red tape, foreigners who relocate to the island are still often dumbfounded by their inability to easily obtain all the relevant information from the various government departments. For Markou, some of the previous piecemeal attempts to digitalise paper-based processes merely created more complications. In order to speed up government services, he says, a new system needs to be built from scratch.

It’s time to switch the conversation a bit. “You have been the CEO here for two years now. What’s the view from the top like?” I ask.

“It’s been… a good challenge,” he replies with a smile.

Markou has been in the profession since 1986, specialising in taxation. After moving from the UK to Cyprus, he started working at Deloitte Cyprus in the early ‘90s and rose through the ranks to head the tax services, with oversight of the firm’s second biggest department. Taking over as CEO was a natural next step in his career.

“Having a big team of executives has definitely helped me,” he says. “It’s not as though I am running 800 people by myself. I have my business leaders who enforce strategy and a support team that helps follow up and make sure that the strategy is applied,” he explains.

Contrary to the levels of uncertainty brought about by the back-to-back crises, recent inflationary pressures have proved more challenging for Markou since they involve external factors – one cannot control the cost of electricity, for example. Meanwhile, the firm started losing people to the big multinationals that Deloitte has advised on how to set up shop in the country. What Markou could control, though, was the creation of a working environment of European standards. This involved buying the latest tech toys for the two main service lines, offering long weekends whenever a public holiday coincides with the weekend, two afternoons off from June to September and one afternoon off the rest of the year, healthcare and support for working mothers, and opening up a roof garden with a café. “We also have an initiative around STEM, so we can bring in people from the sciences into our advisory business – if you want to be the trusted adviser of all kinds of businesses, you need to understand how they work!” he stresses.

As someone who has essentially worked most of his life in a single firm, how does he view the Millennial and Generation Z attitude towards switching employers faster than they change shirts?

“It does pose a challenge,” he admits. “But when people have fewer obligations in terms of having to worry about maintaining a family or making mortgage payments, they can take more risks. It’s only natural that, once you settle down, you will stop experimenting with your career.”

When Deloitte Cyprus released its financial results for 2022, one striking highlight was the fact that the advisory and consulting service line had overtaken audit and taxation, with record double-digit growth driving revenues up by 11.3%. But that now unfashionable service line is also experiencing changes, mainly driven by the increasing amount of regulation that drives up costs for both Deloitte and its clients. The complex web of regulatory compliance has also resulted in increased frustration on the part of employees. Markou explains how Deloitte, like the rest of the Big Four accounting firms, employs the concept of ‘delivery centres,’ essentially regional outposts, which take the heavy lifting off its own employees. These centres are not only cheaper but they also enable Deloitte’s people to focus on the more appealing aspects of the job to drive added-value to their clients. In the battle to retain talent, this appears to be of the utmost importance.

The other development in the service line involves tax planning, which has in part spilled over into advisory. “Obviously, multinationals are facing pressure to pay the right level of tax and tax planning needs to be done with business sense and commercial reality in mind,” he says.

Pieris Markou has been a vocal proponent of the need to change the tax system in Cyprus. What would that entail exactly?

“Our last major tax reform took place 22 years ago – I was part of it – when Cyprus joined the European Union,” he tells me. “That was a good system and it served its purpose but a lot of developments have since taken place within the EU and the OECD. We amend our laws as we go along; we patch things up. But we need an overhaul of the whole tax system to take account of everything that has already taken place and issues like green taxation and others that will arise in the future,” he says.

For Markou, this is especially true as regards “Vision 2035”, the Government’s long-term growth strategy to make the economy green. His solution: all the relevant stakeholders from the public and private sectors, plus experts from abroad, need to sit around a table and discuss the direction in which the country needs to go.

“Does the political will exist to overhaul the system?” I ask.

“Yes it does,” he replies. “We met with the new President before the elections – not just as Deloitte, since I’m also the President of the Institute of Certified Public Accountants of Cyprus. He listened to our recommendations and committed himself to tabling a proposal for a complete tax reform.”

“Are you confident that that will be the outcome?” I ask.

“Yes, I am,” he replies.

On my way down, the elevator stops at the fifth floor and I catch a glimpse of a young employee with a happy smile on her face. It is clear that the old joke about accountancy being a boring profession no longer reflects reality. As firms like Deloitte continue to evolve, having young accountants on the payroll will go a long way towards solidifying their position as the right hand of the business world.

This interview first appeared in the March issue of GOLD magazine. Click here to view it.