End of ‘blank cheque’ culture for Saudi consultancy

• Saudi consultancy worth $3.2bn
• Working on Vision 2030
• Aims for 40% Saudi nationals

Saudi Arabia remains a boom town for the global consultancy industry, but experts have warned it is no longer the land of milk and honey for international operators and there is now a tighter hold being placed on budgets.

The Saudi consultancy market, the largest in the GCC, expanded by 18.2 percent in 2023 with revenues reaching a record $3.2 billion.

Opportunities remain, but Saudi Arabia is scaling back its trillion-dollar Vision 2030 giga-projects, and Dane Albertelli, a London-based senior research analyst focused on the industry at Source Global Research, says consultants are now having to “prove their worth”.

“I think the days of the blank cheque consulting projects are over in Saudi,” he tells AGBI. “I’d say consultants need to rein in what they think and their expectations. There’s no longer an infinite money tree.”

The kingdom’s ambitious $1.25 trillion Vision 2030 initiative is driving the growth in the sector, from the advanced $500 billion Neom city through to the ultra-luxurious tourist destination on the Red Sea.

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This transformation aims to diversify the economy away from oil dependency and create new sectors, generating a high demand for consulting services in strategic planning, digital transformation, and infrastructure development.

The giga-projects are competing for government and private sector resources while struggling with funding constraints caused by lower-than-expected oil prices and foreign investor interest and concerns over borrowing and liquidity in local banks.

Varun Malik, CEO at the consultancy Konsälidön in Dubai, says: “The spending was going a little bit out of control on consultants,. And I think it’s been brought back under control more than anything else.

It is not, Malik says, a matter of the consulting work dying down, but rather the Saudi authorities “tightening the hold on how to spend on consultants.”

In November the country approved its 2025 state budget, which forecasts a fiscal deficit of SAR101 billion ($26.9 billion).

Saudi Arabia also set a goal of having 40 percent of its consultancy professional roles taken by Saudi nationals by March 2024, notably financial advisory specialists, business advisers and cybersecurity advisory specialists, as well as project management managers and engineers.

PwC, Deloitte, KPMG and EY, the “Big Four” of global consultants, all have a strong presence in Saudi Arabia. McKinsey and Boston Consulting Group are also among the international companies winning work in the country.

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A Saudi intellectual, speaking to AGBI in November on condition of anonymity, said people had begun to take notice of how many government projects are being placed in the hands of Westerners, including in the heritage and cultural sphere, where local knowledge is key. 

“The ideas are promising and beautiful, but having Western leaders in charge transfers it into a European thing, with some touches to make a fake authenticity,” they said.

Despite the tightening of budgets, the Employment Index report from the recruitment company Cooper Fitch for the third quarter of 2024 revealed that the strategy consulting sector in the GCC grew 14 percent in the period. There were new opportunities, particularly in the technology, media and telecommunications, transportation, energy and retail sectors.

“Overall hiring activity is gaining momentum after a challenging start to 2024, and this trend is expected to continue into early 2025,” the report found.

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James Ransome, a principal at the independent executive search company Patrick Morgan, headquartered in London, says the focus in Saudi Arabia “will shift toward recruiting sector and functional specialists to strengthen capabilities and stand out in an increasingly competitive market.”

There has been a global slump for the Big Four. Deloitte in the UK is to release one percent of its 27,000-strong workforce in the country.

The Wall Street Journal reports that PwC US is to lay off 1,800 employees. KPMG has released plans that will affect around 4 percent of its 9,000 auditing staff in the US. 

EY has previously intimated in its most recent annual report that 2,450 jobs were lost in the company over 2024.

Albertelli expects countries in the Middle East to will absorb some of those job losses as Saudi Arabia’s Vision 2030 comes to fruition, alongside mega-events including the World Expo in Riyadh in 2030 and the 2034 Fifa World Cup.

“I can’t see a major downturn like there is in Europe at the moment, particularly in the next five to 10 years,” he said. “There’s still an awful lot to be done.”

This article was first published on December 23, 2024