Consulting industry of Saudi Arabia set for return to double-digit growth

The management consulting industry of Saudi Arabia is expected to return to double-digit growth this year after beginning its rebound in 2017 following several years of diminished returns.

According to data from Source Global Research, a research consultancy for the consulting industry, the states of the GCC – Bahrain, Kuwait, Oman, Qatar, the UAE and Saudi Arabia – last year saw their collective management consulting market grow to a worth of $2.8 billion, returning to positive growth at a rate of 7 percent following a period of decline from 2014 when growth was running as high as at 20 percent or more.

Of this $2.8 billion sum, the management consulting market of Saudi Arabia was by far the major contributor, bringing in revenues of almost $1.3 billion alone at a growth rate of above 8 percent – ahead of the UAE which returned approximately $790 million, Qatar at around $340 million, and the smaller markets of Oman (~$100 million) and Bahrain ($80 million). And the slight market turn-around of is tipped to develop into a full blown rebound this year, with Source Global projecting double-digit growth for Saudi Arabia in 2018.

Such double-digit figures for growth, when the GCC market was the darling of the global consulting industry and the Saudi Arabian arena its beckoning crown jewel, quickly fizzled out with the rapid dive in international oil prices at the back of 2014, with government purse-strings suddenly tightened and project spending constrained; the public sector generally accounting for close to a third of consultancy fees in the region.The flip-side to this coin, however; a series of national transformation programmes underway across the GCC region to steer local economies away from a reliance on resources – and a fresh bonanza for the big players of the strategy and management consulting realm. Of these economic transformation agendas, which are seeing a renewed hike in fiscal contributions to hasten the contribution of non-oil sectors, the Saudi Arabian Vision 2030 programme is by far and away the most ambitious – given extra impetus by the Crown Prince Mohammed bin Salman’s bold and urgent measures, such as with Saudi females being finally granted the right to drive.

Further fuelling growth for the management consulting industry, both locally and across the globe, is the dawn of digitisation, which combined with the timing of the widespread transformation objective in the GCC makes for a heady mix – with digitisation in the KSA, according to EY, further being accelerated by the roll-out of VAT. The technology sector is now the biggest and fastest growing segment for the consulting industry in the GCC, accounting for about 36 percent of the total market and overtaking strategy as the regional transformation plans move toward a phase of implementation.

Consulting players

This combination can be seen in sharp focus with respect to recent consulting activity in the Kingdom and the big firms’ maneuverings to carve out a greater slice of the turf – slices which are only set to get bigger, according to reports, with the government moving to consolidate its consulting streams per ministry into singular colossal contracts. The world’s two biggest management firms McKinsey and BCG have already made early moves, with BCG opening an office in Riyadh in 2015 and McKinsey picking up the local management outfit Elixir early last year.

In respect to the convergence of consulting, transformation and technology, Deloitte recently established a digital delivery centre in the Kingdom with the support of the Saudi Ministry of Communication and Information Technology, and has since been tapped by the Saudi Arabian Monetary Authority to help build the capital into a world-class fintech hub. Accenture, meanwhile, has installed IT business veteran Khaled Al-Dhahera as its new country managing director to help drive the firm’s local digital consulting strategy.

Recently, Accenture outlined what it believed the potential $215 billion boon in gross value added to Saudi Arabian economy by 2035 through the implementation of AI technologies, while A.T. Kearney has put the figure for the combined direct and indirect impact of Industry 4.0 technologies on the production sector at a potential worth of approximately $270 billion by 2030. Oliver Wyman, too, has reported on the huge potential that Industry 4.0 holds for the growing petrochemicals industry in Saudi Arabia and the Gulf.

Outside of the hydrocarbons and technology sectors, PwC’s Strategy& meanwhile expects increasing investment in Saudi Arabia’s fertile renewables landscape – signaled by the Saudi government and SoftBank Vision Fund’s stunning plan to build a $200 billion solar power network in the Kingdom with a 200GW capacity on its 2030 completion. PwC’s fellow Big Four rival KPMG has also been busy in Saudi Arabia, recently establishing a dedicated research and economics unit in the Kingdom to aid and promote inbound investment.