Consulting in Saudi Arabia: Facing Challenges Amid Changing Priorities
As Saudi Arabia emerges from the shadow of the pandemic, the consultancy market is experiencing a slowdown after years of explosive growth. The kingdom’s once thriving consulting sector is now grappling with a shifting landscape as Riyadh reins in spending and reevaluates its massive investments in outside advisors to drive its ambitious infrastructure projects.
Key Highlights and Insights:
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An Industry in Transition:
- The consulting market in Saudi Arabia witnessed an impressive growth rate of 38% in 2022 and 25% in 2023, but this momentum is expected to slow down to just 13% this year.
- The era of unlimited consulting budgets appears to be fading, with a senior research analyst pointing out that blanket spending on consulting projects is a thing of the past.
- The recent ban imposed by the Public Investment Fund on PwC for new advisory work underscores the government’s concern over excessive spending on consultants.
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Changing Dynamics:
- Saudi Arabia’s consulting market has been a lifeline for firms facing challenges in domestic markets, with PwC’s Middle East revenue outperforming its UK counterpart.
- The Gulf region’s consulting market reached $7bn in 2024, with Saudi Arabia leading the pack, thanks to massive projects like Neom and futuristic skyscraper cities.
- The kingdom’s reliance on consultants to drive transformation and economic diversification has led to concerns over excessive spending and value for money.
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Economic Realities:
- Despite ambitious visions like Vision 2030, oil production cuts and lower prices have constrained government spending, impacting revenue streams like the recent dividend cut by Aramco.
- The struggle to attract foreign direct investment, combined with evolving economic priorities, is prompting Saudi Arabia to rethink its spending on consultants and infrastructure projects.
- Navigating Uncertainty:
- Consultants are facing increased pressure on fees as the market becomes more competitive, leading to price wars and tighter margins.
- While some firms are resisting steep discounts, the industry landscape is evolving, creating challenges and opportunities for consultancy firms operating in the region.
In Conclusion:
As Saudi Arabia continues its journey towards economic transformation and diversification, the consultancy sector is at a crossroads. The industry faces challenges in balancing client demands, competitive pressures, and evolving economic priorities. Despite the slowdown, experts believe that the Saudi market remains a significant opportunity for consultants with specialized expertise. The kingdom’s ambitious projects, such as the upcoming Asian Winter Games and the 2034 football World Cup, will continue to drive demand for consultancy services. However, the industry must adapt to changing realities and deliver tangible value to stay relevant in the evolving landscape of Saudi Arabia’s consulting market.
