By Gavin Gibbon
Governments in the region spent $1.1bn in consulting support to diversify their economies
The GCC consulting market grew by 9.9 percent in 2019 to hit $3.3 billion, according to the latest report from Source Global Research.
Almost half of that ($1.6bn) was recorded in Saudi Arabia, despite a royal order being issued in September last year, effectively banning government departments and agencies in the kingdom from using foreign consultancy firms.
Zoë Stumpf, head of consulting market trends at Source Global Research, said the decree has not impacted services in Saudi.
“Following royal decree in September 2019 to ban foreign consulting firms from public sector work, we spoke to a number of firms operating in Saudi Arabia,” she said. “Some of these consulting firms said at the start of 2020 that they were concerned about how this could impact future demand, and acknowledged that much would depend on full enforcement taking place.
“A few other firms were sufficiently concerned that they were factoring it into their 2020 plans, though others were much less worried, and were expecting things to be very much business as usual.”
Annual consultancy revenues in the UAE were up 7.2 percent to $916 million, while in Kuwait they increased 8.8 percent to reach $214m.
Governments across the GCC continued to invest heavily in consulting support to diversify their economies and reduce their dependency on oil revenues – with public sector work rising 10.2 percent to hit $1.1bn for the first time in 2019.
Stumpf added: “In the large Saudi Arabia market, there’s a huge amount of support needed to shape the detailed strategies underpinning Vision 2030, and further work will be required to turn those strategies into reality.
“In the UAE, all the changes happening in Abu Dhabi will lead to calls for consulting help, and even in the more sluggish Dubai market, an appetite for sophisticated technologies and the knock-on effect of Expo 2020 are expected to lead to good levels of demand.”
Technology consulting services rose 10.7 percent to $1.2bn, while financial services revenues grew 9.3 percent to $698m.
Stumpf, however, cautioned that the impact of the current coronavirus pandemic is still unknown.
She said: “The wider impact of the coronavirus on the GCC consulting industry will be three-fold. In the first instance, some clients will stop existing projects, especially where they involve consultants working extensively in the clients’ office - so work redesigning business processes, when you need to watch what people do and talk to them - will be especially effected. Strategy work, because so much of the work can be done at a consulting firm’s office or even from the consultants’ home, may be less impacted by this.
“Second, some sectors and geographies are clearly being more severely hit than others: airlines and China being the most obvious casualties to date. However, some sectors will find they face new challenges - manufacturers trying to build new supply chains, for example - and that might actually increase the demand for consulting in some areas.
“Third, there’s the wider economic impact of the virus: It’s likely that this will push the world economy into a recession, and companies that are generating less profits typically spend less on consulting.”