The National: Governments across the GCC continue to invest heavily in hiring consultants to help them diversify their hydrocarbon-dependent economies, with public sector mandates pushing consulting revenue 10.2 per cent higher to pass the $1billion (Dh3.67bn) mark for the first time in 2019.
Saudi Arabia, the biggest Arab economy and Opec’s largest oil exporter, was the main driver of public sector work for consultants last year, according to a new report by Source Global Research, a firm that specialises in global professional services market research.
Consulting revenue in the kingdom grew by over 12 per cent to $1.6bn. The overall consulting market in the Gulf grew 9.9 per cent to $3.3bn.
“We expect further growth in consulting demand right across the region to the end of 2020,” Zoë Stumpf, head of consulting market trends at Source Global Research, said. “In the large Saudi 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 addition to the rising demand in the public sector, clients turned to consultants for support with migration to the cloud, data and analytics, pushing technology consulting services revenue 10.7 per cent higher to $1.2bn last year. Financial services mandates also performed well in 2019, with revenues growing 9.3 per cent to $698 million, according to the report.
Governments in the GCC, which accounts for about a third of the world’s proven oil reserves, are trying to radically transform their economies away from oil. The push for diversification came after the three-year oil price slump, which began in 2014 and dented hydrocarbon revenue streams of governments in the region. It forced policymakers cut spending, shelve projects and remove subsidies to reduce the burden on the public purse.
All GCC states are now running their own separate economic transformation programmes such as Saudi Arabia’s Visions 2030 and Abu Dhabi’s Dh50 billion Ghadan 21 schemes. Dubai’s Expo 2020 has also helped consulting business in the region and Source Global said there is still a strong pipeline of public sector work requiring consulting support.
However, Saudi Arabia's planned restrictions on the use of foreign consulting firms on public sector projects “could affect the demand pipeline of foreign consulting firms”, according to Stumpf.
Full enforcement of the decree could mean that a lack of local capacity coupled with the inability to turn to foreign firms could disrupt transformation work, the report noted.
The spread of the deadly coronavirus through the region and subsequent travel restriction in its wake are another impediment to consulting business growth this year, Ms Stumpf said.
“Consultants, who have got used to flying into the region on a weekly basis to deliver projects for clients, will now need to think creatively about how they can continue to deliver the client's project from a virtual location. This will be possible for some projects, but impossible for others,” she said.
The wider impact of the coronavirus on the GCC consulting industry may impact existing projects, especially those requiring consultants working extensively in their clients’ offices. However, strategy work will be less impacted as consulting firms can do most of this from their own offices, she noted.
https://www.thenational.ae/business/economy/gcc-consulting-market-grows-in-2019-as-revenue-from-public-sector-jumps-to-1bn-1.994456
