Saudi Arabia’s localization plan is reshaping consultancy sector – and more beyond
RIYADH: As Saudi Arabia embarks on a journey aimed at boosting job opportunities for citizens, the localization plan for consultancy professions and businesses plays a crucial role.
In October 2022, the Kingdom’s Ministry of Human Resources and Social Development issued a decision mandating that from the end of March 2024, 40 percent of workers in firms in this sector must be Saudi nationals.
The decision targeted all professions in the sector, most notably financial advisory specialists, business advisers, and cybersecurity advisory specialists, as well as project management managers, engineers, and specialists.
This targeted localization, or Saudization, is part of the cooperation between the Ministry of Human Resources and Social Development and supervising bodies, represented by the Ministry of Finance, the Local Content and Government Procurement Authority, the Expenditure and Project Efficiency Authority, and the Human Resources Development Fund.
The collaboration aims to elevate the presence of cadres in the sector and boost the percentage of Saudis, contributing to the development of local content in this strategic sector. It also seeks to organize the labor market.
The ministry is meant to support private sector establishments in several ways, including helping them in hiring Saudis by supporting the training and qualification of employees, as well as supporting employment procedures and other initiatives.
On a similar note, the Local Content and Government Procurement Authority is required to follow up on the commitment to include Saudization requirements in consulting contracts.
It has also issued a guide that clarifies the details of localizing the consultancy sector and professions, and the mechanism of implementing it.
Reshaping the consultancy sector
Azeem Zainulbhai, co-founder and chief product officer at talent-on-demand platform Outsized, believes the Saudization rules in the sector will help keep more money in the Kingdom, even though training costs could increase.
“This move means less reliance on experts from abroad in key fields like finance, project management and cybersecurity. Essentially, it’s about creating more jobs for Saudis in important, well-paying sectors and making sure they’re trained for these roles,” he told Arab News.
“The end objective is to get better at handling projects and business dealings that are specific to Saudi culture and regulations, stimulate private sector growth, and foster a knowledge-based economy ultimately making companies more efficient and competitive globally,” the co-founder emphasized.
Bashar El-Jawharim, consulting partner at PwC Middle East, also stated that the localization plan initiated by Saudi Arabia marks a significant milestone in reshaping the consulting sector within the Kingdom.
“With the launch of the second phase, we anticipate several key transformations that will contribute to the development and empowerment of local talent,” El-Jawhari told Arab News.
“Firstly, as young Saudi professionals enter the workforce, we expect a notable increase in demand for consulting services related to project and transformation management, financial and legal advisory, as well as procurement and supply chain management,” he added.
By having more Saudis in consulting, businesses can better navigate local market dynamics and regulations.
Azeem Zainulbha, Co-founder and chief product officer at Outsized
The consulting partner went on to note that the influx of senior Saudi talent into the consulting industry presents an opportunity for firms to leverage their experience and insights to drive business growth.
Sectors to be affected
The localization push of course expands beyond the consultancy sector, Zainulbhai noted.
“Tourism and hospitality can really use local insights to attract more visitors and celebrate Saudi culture. Major construction and engineering projects, like the NEOM and the Red Sea Project, will also benefit from having local experts who understand the specific requirements and standards needed,” he said.
The Outsized executive also shed light on the fact that the healthcare, IT, cybersecurity, and renewable energy sectors are all set to improve with more local consultants who bring a deep understanding of regional needs and regulations.
“Local financial experts will be key in adapting to Saudi Arabia’s unique market, especially as it continues to grow and change,” Zainulbhai commented.
Overall, sectors essential to the diversification from oil will see substantial growth and development from this localization.
“When looking at various sectors, certain areas are poised to benefit more prominently than others. For example, the government and public sectors are likely the first to benefit in light of the transformation journey towards Vision 2030,” El-Jawhari affirmed.
The consulting partner explained that as Saudi Arabia continues its journey toward achieving the ambitious goals outlined in Vision 2030, there is a growing emphasis on enhancing the efficiency and effectiveness of government operations.
“Consulting services play a vital role in supporting this transformation by providing strategic guidance and expertise in areas such as organizational restructuring, process optimization, and performance management,” El-Jawhari commented.
He added: “Furthermore, nationals equipped with experience in operational excellence are well-positioned to contribute to these efforts by implementing measures aimed at optimizing operational processes, reducing costs, and enhancing productivity.”
Potential opportunities
The plan is a huge opportunity for Saudi Arabia to boost local jobs and reduce its reliance on foreign workers, which aligns perfectly with the broader Vision 2030 goals.
“By having more Saudis in consulting, businesses can better navigate local market dynamics and regulations,” added Zainulbhai.
He continued to underscore that local consultants can offer insights that make companies more competitive, especially in sectors where understanding local consumer behavior is crucial.
He also clarified that businesses that follow these new hiring rules may find it easier to onboard government clients.
“The focus on local talent is also great for fostering innovation and could help companies set up successful programs to nurture new ideas in fields like digital tech and sustainability,” Zainulbhai explained.
From El-Jawhari’s point of view, the localization plan presents opportunities for Saudi nationals to enter the consulting profession, contributing to the development of a vibrant knowledge-based economy.
Potential challenges
While there are many benefits, the plan also brings several challenges. According to Zainulbhai, those include filling talent gaps, adjusting to cultural shifts, and meeting new regulatory standards.
“To tackle these, businesses could set up mentorship programs where seasoned international consultants train up-and-coming Saudi professionals. Setting up special training centers to quickly upskill workers could also help,” the co-founder described.
“There might be some resistance to these changes within companies, so promoting a culture that values diverse perspectives will be important,” he added.
Zainulbhai also believes that consulting with local legal experts will be crucial to stay on top of new regulations.
We anticipate several key transformations that will contribute to the development and empowerment of local talent.
Bashar El-Jawhari, Consulting partner at PwC Middle East
“Although initial costs might be high, businesses can look into government subsidies or focus on tech solutions to reduce long-term expenses and increase efficiency,” he said.
From PwC’s perspective, El-Jawhari said that the availability of fresh, well-educated Saudi graduates provides consulting firms access to junior talent.
“The challenge lies in retaining them beyond the first 4 to 5 years. Government and semi-government entities begin to recruit these nationals, who have gained experience in international consulting firms, to join their workforce,” he stressed.
The consulting partner went on to explain that another challenge is attracting mid-career Saudi consultants who are in high demand and short supply.
“The third challenge is distinct specialties. For example, with the strong drive toward diversifying the economy, there is a need for consulting experience across sectors such as industrial, defense, tourism and culture, sports, and entertainment, supported by international experience,” El-Jawhari revealed.
He further disclosed: “Overall, finding Saudi talent in relatively new sectors of the economy is quite challenging.”
“To expand the pool of mid-career Saudis, a program between government entities and consulting firms could be established. The program could include seconding talented mid-career Saudis into consulting firms for 1 to 2 years,” El-Jawhari clarified.
He wrapped up with this regard saying that this gives consulting firms access to mid-career Saudi talent and in return, government entities gain a mid-career professional equipped with consulting experience.
Vision 2030 implications
Undoubtedly, this plan provides a key piece of the bigger Vision 2030 puzzle, which aims to diversify the economy beyond oil and boost public services like health and education.
“By increasing Saudi involvement in consulting, the plan helps keep more money in the country and creates high-value jobs that are crucial for modernizing the economy,” Zainulbhai said.
The co-founder also mentioned that it also focuses on upgrading the skills of the Saudi workforce, which is essential for innovation and sustained economic growth.
“More local consultants mean the private sector can grow stronger and more independent, making Saudi Arabia a more appealing place for investors and helping develop key sectors,” he concluded.
On the other side, El-Jawhari shed light on how two key outcomes of Vision 2030 are a thriving economy and a vibrant society.
“Pushing for a higher level of consulting localization will create higher-paid jobs for Saudi nationals, resulting in a more vibrant society that enjoys a higher quality of life,” the consulting partner reiterated.
“Additionally, local talent can provide the necessary expertise in specific consulting services to catalyze economic diversification,” he concluded.
