Foreign consultancies in Saudi Arabia are reining in a years-long boom in hiring, recruiters and analysts say, as the kingdom reviews its priorities and slows parts of its economic transformation plan.
Consulting firms have piled into the Middle East’s largest economy since 2016 when it embarked on several transformational “gigaprojects”, including futuristic economic area Neom with its 170km linear city, The Line.
But low oil prices that are cutting into government budgets and doubts about the feasibility of some projects have slowed activity this year, as Saudi officials weigh up where to direct spending.
“There’s a bit of a panic, at least within KPMG,” said one former partner at the Big Four firm. “Understandable, considering 60-70 per cent of [advisory] revenue was public sector.”
KPMG said businesses worldwide were “navigating an uncertain economic environment”, and that “many professional services organisations” had been affected. The firm said its Middle East business continued to “align its services to current client demand”.
Dane Albertelli, senior research analyst at consultancy-focused advisory firm Source Global Research, said “there’s definitely been a realignment in the year but it’s becoming even more acute I think in the last two or three months”. He expects “a marked decrease” in the Saudi consulting market’s growth from 25 per cent in 2024 to about 11 or 12 per cent this year.
Consultants are at a “crossroads because the Saudis are realigning what projects are top of the agenda, and obviously contracts are going to be awarded in different ways because of that”, Albertelli added, saying there would be “losers” as well as winners.
Jason Grundy, Middle East and Africa managing director at executive recruitment firm Robert Walters, said that with many of the kingdom’s gigaprojects having moved from planning to delivery phase, less consulting was required. “Strategy consultancy firms don’t mix cement,” he added.
Bashar Kilani, United Arab Emirates managing partner at recruitment firm Boyden and a former managing director at Accenture in Dubai, said that what was once rapid-fire hiring by the consulting firms “is slowing and in some cases there are cutbacks”.
“It’s driven by two forces,” he added. “One is the actual reduction in spend [by clients] but the other one is technology,” with artificial intelligence forcing firms to show greater efficiencies.
An Accenture consultant working in the kingdom added some firms were getting “majorly hit” by staffing cuts as a result of the new environment, while “AI is actually doing many tasks better than humans at analyst level”.
Kilani estimated that in consulting teams focused on banking and finance there had been a “15-20 per cent reduction” in middle management jobs, while in teams focused on construction the decrease was “much higher”.
But curbs on employee numbers come after an “unprecedented” increase in staffing levels for consulting firms in Saudi Arabia since the pandemic, Kilani added. According to researcher Albertelli, “this is a pause rather than a decline”.
The workforce boom had been driven by government entities looking for help from consultancies in accelerating the ambitious projects in Crown Prince Mohammed bin Salman’s “Vision 2030” plan, with outsiders assisting in everything from drawing up strategies to attract tourists to setting up entirely new ministries.
Consulting in Saudi Arabia “is softening back to a real market”, said one retired PwC partner. “It’s been an extraordinary market for the last five years”.
The FT has previously reported downward pressure on fees for consulting services, which some in the sector say have fallen as much as 40 per cent this year.
Industry insiders report increasing scepticism from government clients about the role of consultancies, as value for money becomes paramount. Officials are concerned about consultants “overpromising on mega-projects, over-optimism”, said the retired PwC partner, as well as “the talent churn inside firms, and . . . conflicts of interest”.
Companies under the umbrella of Saudi Arabia’s sovereign Public Investment Fund, which is driving the kingdom’s economic diversification efforts, are also coming under increasing pressure to deliver results. Management teams are facing more scrutiny from their boards, many of them populated by government ministers, to meet targets and tighten their spending, including their outlay on consultants.
It was taking longer for government entities to approve consulting contracts because the agreements were being more closely scrutinised, said Omer Zakaria, Robert Walters’ Saudi Arabia country head.
“If someone wants to use a Bain or a BCG or a Big Four, they have to go through a process of getting it approved by the main government . . . it’s taking a while to do that,” he added, estimating a four-to-six-month lag. “The Big Four can’t wait and they were already heavily staffed based on the old model.”
However, some consultants say approval processes were already lengthy.
A former local PwC consultant said some government agencies had also become more restrictive about hiring foreign consultants at sensitive ministries over security concerns, limiting work on certain projects to Saudi nationals.
Grundy and Zakaria said there had been a “significant” decline this year in the number of placements Robert Walters makes for senior roles in professional services firms in Saudi Arabia, even as demand has risen in sectors such as healthcare, tourism and law.
The former KPMG partner said he was receiving messages from recruiters “several times per day offering me very senior talent based in Saudi Arabia”.
Others in the industry said consulting firms were still taking on new staff but that the pace had slowed. While hiring continues because of constant attrition, one strategy consultant said, overall headcount growth was lower than in the past as firms adjusted after a period in which they “overhired”.
While many say they expect the consulting market in Saudi Arabia to weather the slowdown, others are more pessimistic.
“The glory days are over,” said one executive. “Now it’s a hard slog with more people in the room.”