Saudi Arabia, historically a lucrative market for international consulting firms, is undergoing a notable transformation in its approach to external advisory services. The kingdom’s government is reassessing its reliance on foreign consultants, leading to a slowdown in contract awards and prompting firms to relocate staff to other regions, including Doha. This shift reflects a broader trend within the consulting industry, which is grappling with various challenges worldwide.
A significant development highlighting this change is the recent decision by Saudi Arabia’s Public Investment Fund to impose a one-year ban on awarding new advisory work to PricewaterhouseCoopers . This move followed PwC’s attempt to hire a senior executive from Neom, a flagship project managed by PIF. While ongoing projects and audit work remain unaffected, PwC’s future bidding opportunities for PIF contracts are now restricted. This incident has intensified discussions about the kingdom’s dependence on international consultants amid its ambitious development plans.
The consulting industry globally is experiencing a period of introspection and restructuring. The Big Four accounting and consulting firms—Deloitte, Ernst & Young , KPMG, and PwC—have collectively reduced their workforce by nearly 3,000 roles over the past two years, with further layoffs anticipated. Deloitte has been the most aggressive, cutting approximately 1,300 jobs, while KPMG, EY, and PwC have also implemented significant reductions. These measures are driven by a decline in demand for consulting services post-COVID-19, escalating salary costs, and the imperative to invest in emerging technologies, notably artificial intelligence. Additionally, low staff attrition rates and economic uncertainties, including geopolitical tensions, have compounded these challenges.
In response to these pressures, firms are reevaluating their organizational structures. KPMG, for instance, plans to merge dozens of national partnerships within its global network to bolster growth and mitigate audit scandals. This restructuring aims to reduce the number of “economic units” from over 100 to as few as 32 by next year, enhancing scale, resilience, and quality. Consolidations have already occurred in regions such as the Middle East and Africa, with a UK-Switzerland merger approved last year. This approach seeks to address challenges in technology investment and compliance, particularly for smaller countries.
The Middle East, particularly the Gulf Cooperation Council countries, remains a significant market for consulting services. The consulting market in the GCC grew by 13.2% in 2023, driven by ambitious projects like Saudi Arabia’s Vision 2030 and the UAE’s economic diversification initiatives. These projects require extensive advisory work across sectors, including infrastructure and healthcare innovation. Major firms like Deloitte, PwC, EY, and KPMG have established a strong presence in the region. However, the heavy reliance on international consultants has raised concerns about the influence of foreign firms on policymaking and the potential erosion of public trust. Local boutique advisory firms are emerging, and policies like Saudi Arabia’s “Saudization” aim to increase national participation in the sector.
Saudi Arabia’s localization initiatives are reshaping the consultancy sector. The kingdom’s “Saudization” plan aims to diversify the economy and reduce reliance on foreign experts in key fields like finance, project management, and cybersecurity. This strategy seeks to create well-paying jobs for Saudis and ensure they are well-trained, thereby retaining more money within the kingdom despite higher training costs. A robust education system is pivotal in reducing dependence on foreign talent, lowering operational costs for local businesses, and fostering economic resilience.
Consulting firms are also contending with internal challenges. Maintaining robust client relationships, adapting to varying corporate cultures, and staying ahead in a fiercely competitive environment are ongoing concerns. The need for consultants to align with growing fields, such as data analytics and digital marketing, is crucial for sustained growth. Firms that succeed often do so based on the strength of their founders’ relationships and their ability to absorb and adapt to new challenges.
