GCC consulting market breaks $3 billion barrier with 9% growth

The management consulting market of the GCC has cracked the $3 billion mark according to analysis from Source Global Research, with 9 percent growth in 2018.

Professional services sector research and data consultancy Source Global Research has released its 2019 report on the management consulting industry of the GCC, reporting year-on-year growth of 9.1 percent in 2018 – with the positive growth seeing the regional market break the $3 billion barrier for the first time. The region was again led by surging demand for consulting services in Saudi Arabia, with healthcare and pharma the fastest growing sectors.

Following a period of falling returns between 2014 and 2016, when the region was rocked by a dramatic slump in global oil prices, last year’s results continue a positive growth trend for the management consulting sector in GCC, backing up from a 7 percent rise in 2017. And with the region’s sweeping economic diversification agenda unfolding apace, Source Global expects the momentum to continue, forecasting a return to double-digit growth over the current year.

“Of course, it’s not just the vagaries of economic growth that influence the level of demand in this or indeed any market – consultants have their uses in both good times and bad,” the firm noted of the positive returns. “But generally speaking, economic growth is not a bad predictor of consulting volume, which makes it all the more interesting that 2018, after a slow start, proved to be a strong year for the GCC consulting market, despite pretty modest economic growth across the region.”

According to the firm’s research, last year’s impressive growth in the GCC was largely driven by rising demand in Saudi Arabia, with the Kingdom already accounting for almost half of the region’s consulting spend – generating over $1.3 billion in consulting revenues in 2017. The United Arab Emirates, the GCC’s second-largest consulting market, also performed strongly, with steady growth of above 7 percent and an overall take of nearly $850 million.

On the other hand, consulting growth outside of Saudi Arabia and the UAE was said to be patchy, with the Bahrain and Oman markets described as sluggish at best and consultancies operating in Kuwait experiencing an uptick in client work. Qatar meanwhile recorded lackluster growth, due to the diplomatic freeze-out by its fellow GCC member states (bar Oman) and land and aviation blockade making for an increasing isolated and difficult market to serve.

In terms of sectors and functions, healthcare and pharma – which is serviced by the healthcare practices of the leading management and professional services firms along with specialised players such as GE Healthcare Partners – was reported as the fastest growing sector (up 12.6 percent to over $215 million), while the public sector, which has accounted for close a third of the overall spend in recent years, followed with 10 percent growth to $965 million.

Amid a raft of ongoing regulatory changes at both the regional and global level, risk and regulatory work meanwhile was the fastest growing service line in the GCC – with Deloitte reporting early last year that financial compliance and risk measures had been dipping in the MENA region due to what was likely regulatory overload. Elsewhere, digital is expected to continue being a major consulting industry driver in the region moving forward.

Still, despite the solid recent growth and healthy forecast, Zoë Stumpf, Source Global’s head of market trends, warns that 2019 won’t be entirely smooth sailing. “Though the news in the GCC consulting market is overwhelmingly positive, there are a number of headwinds with the potential to impact growth. For instance, the impact that recent international censure has had on foreign investments and the fluctuating price of oil are sources of concern for some consultants.”

The research firm also notes an ongoing a prevalent issue specific to the region which has been a staple of its regional reports since 2012: the lax attitude toward payments. “This is still a problem that continues to present one of the biggest challenges to consulting firms working in the region,” writes Julie Ahadi, Source’s head of strategic planning and operations in a separate blog-post, “adversely affecting planning, resourcing, communications, and sometimes even solvency.”

Fully established in 2009 – with an office launched in Dubai the following year – Source Global focuses on mid- and large-sized consulting firms, drawing on its 9.7 million data-point-strong global data model together with interviews with senior consulting executives and clients to produce its comprehensive and detailed reports – in turn serving the professional services sector with data-driven consulting services in areas such as acquisition strategy and brand insights.

Among others, senior consulting participants in Source’s 2019 GCC study included; Stephan Haller, Middle East Managing Partner at Horváth & Partners; Pedro Oliveira, Oliver Wyman Middle East & Africa head; recently appointed Roland Berger managing partner Rene Seyger; Sia Partners partner Rafael Lemaitre; Francesco Pavoni, MENA Managing Director for PA Consulting, and local Big Four advisory leaders Tim Parr (Deloitte), Wasim Khan (EY), Vikas Papriwal (KPMG Lower Gulf), and Anil Khurana (PwC) - who has since taken up a global position.