In an effort to enhance job prospects for its citizens, Saudi Arabia has initiated a significant localization plan for the consultancy sector. The Ministry of Human Resources and Social Development has declared that by March 2024, consultancy firms must ensure that 40 percent of their workforce are Saudi nationals.
All roles within the sector, including financial advisors, business consultants, cybersecurity specialists, project management professionals, engineers, and other experts, are encompassed by this mandate.
This initiative, known as Saudization, is the result of a collaboration among various governmental entities, including the Ministry of Finance and the Local Content and Government Procurement Authority. The overarching goal is to increase local participation in this pivotal sector and to regulate the labor market more effectively.
Private sector companies can expect support from the ministry in hiring and training Saudi employees, while the Local Content and Government Procurement Authority is tasked with ensuring adherence to Saudization in consulting contracts.
Reshaping the consultancy sector
Experts like Azeem Zainulbhai, co-founder of Outsized, believe that such rules will keep more capital within the country’s borders despite potential rises in training expenses. By reducing dependence on foreign expertise in key areas such as finance and project management, the move is aimed at creating new job opportunities for Saudis within significant and lucrative fields of work.
According to Zainulbhai, the ultimate aim is to enhance the handling of culturally and legally specific projects and business activities in Saudi Arabia, which will stimulate private sector growth and the knowledge-based economy, making companies more efficient and globally competitive.
Bashar El-Jawhari, a consulting partner at PwC Middle East, also acknowledges that these measures signify a transformation of the consulting sector, expecting a surge in demand for consulting services in project management, financial and legal advisory, procurement, and supply chain management as more young Saudi professionals join the workforce.
By having more Saudis in consulting, businesses can better navigate local market dynamics and regulations.
The infiltration of senior Saudi talent into the consulting industry is seen as a chance for firms to use their experience to drive business growth.
Sectors to be affected
Zainulbhai noted that the localization initiative extends beyond consultancy. Industries like tourism, hospitality, construction, and engineering stand to benefit from local expertise, particularly for large-scale developments like NEOM and the Red Sea Project. Health care, IT, cybersecurity, and renewable energy sectors are also expected to see improvements with the integration of local consultants.
Government and public sectors, in particular, are poised to reap early benefits as the country marches towards the goals set by Vision 2030, which aims to diversify the economy away from oil.
Potential opportunities
The localization plan is viewed as an opportunity for Saudi Arabia to boost local employment and reduce reliance on foreign labor, aligning with the broader objectives of Vision 2030. Local consultants could provide valuable insights, making businesses more competitive and facilitating easier onboarding of government clients.
Potential challenges
However, the plan does present challenges such as talent gaps and adjusting to cultural and regulatory changes. Solutions could include setting up mentorship programs and specialized training centers to upskill workers swiftly.
El-Jawhari from PwC pointed out the difficulty of retaining Saudi talent after they’ve gained experience, the shortage of mid-career Saudi consultants, and the need for expertise in new economic sectors. A proposed solution is to establish a program facilitating the exchange of mid-career professionals between government entities and consulting firms.
Vision 2030 implications
As part of Saudi Arabia’s Vision 2030, the localization plan is a key component in transforming the economy and enhancing public services such as health and education. It aims to create high-value jobs and upgrade the skills of the Saudi workforce, which is integral for innovation and economic growth.
For Vision 2030’s objectives of a thriving economy and vibrant society, the increased role of local talent in consulting is expected to generate higher-paying jobs and provide the specialized expertise necessary for the Kingdom’s economic diversification.