GCC consulting market crosses $3bn for first time on economic transformation push

Growth last year followed a contraction for the first time in 2020

Saudi Arabia’s consulting market recorded the strongest growth regionally in 2021. Bloomberg

The GCC consulting market recorded its fastest growth in seven years in 2021, rising almost 18 per cent to exceed $3 billion for the first time on the back of economic transformation efforts in the region, according to a report by Source Global Research.

Despite volatile oil prices and Covid-19-related restrictions lingering in the market last year, government efforts to move forward with mega projects such as Expo 2020 Dubai, the FIFA World Cup Qatar 2022 and Saudi Arabia's Vision 2030 boosted demand across the consulting market.

The growth last year came after the consulting industry in the GCC contracted for the first time, by 1.5 per cent, in 2020.

“Our data shows that the GCC is recovering quickly from the pandemic. Almost half of the clients we surveyed in the Gulf region think that their organisations have returned to normal after the pandemic, which is a significantly higher proportion than in other countries that we’ve analysed,” said Ashok Patel, market trends, content and strategy lead at UK-based Source Global Research.

“With greater optimism returning to the region and almost two thirds of client organisations expecting to spend more on consulting support this year than they did in 2021, we’re forecasting another strong year for the region’s consultants.”

The GCC has rebounded strongly from pandemic-induced headwinds with higher oil prices and improving tourism and travel supporting the growth of the region's economy.

Gross domestic product growth in GCC economies is expected at 4.5 per cent this year, buoyed by the increase in oil prices, but will not recover to pre-pandemic levels till 2023, the World Bank estimates.

The International Monetary Fund, meanwhile, estimates that the region's economic growth will accelerate to 6.4 per cent in 2022, from 2.7 per cent in 2021, an upgrade of 2.2 percentage points from the fund’s October projections.

The upgrade “largely reflects upward revisions for Saudi Arabia (2.8 percentage points) and, to a lesser extent, other economies (Kuwait, Oman and UAE), reflecting higher oil production in line with the Opec+ agreement, base effects and a recovering non-oil sector”, the IMF said.

The lender expects non-oil GDP in the GCC to expand 3.5 per cent to 4 per cent in 2022 and 2023, despite a gradual slowdown relative to 2021.

Saudi Arabia’s consulting market — the largest in the GCC — grew faster than the overall market in 2021, rising almost 19 per cent to $1.8bn, the Source Global Research report said.

“Bolstered by resurgent oil prices, the Saudi government pursued its commitment to diversifying the national economy in line with Vision 2030 and took the next steps towards building Neom,” it said.

The UAE was the second biggest market in the region, with the consulting market growing by about 17 per cent to $736 million last year.

“Although Saudi Arabia led the GCC in terms of consulting market growth, the UAE, the region’s second largest market, also grew at an impressive 16.6 per cent, largely driven by the country’s desire to emerge from the pandemic in a strong position,” Mr Patel said.

“Long-anticipated events such as the pandemic-delayed Expo 2020 generated opportunities for consultants of all stripes as the country geared up to showcase its strengths.”

In terms of sectors, pharma and biotech recorded the fastest growth last year, with consulting revenue up more than a quarter in 2021.

“Digitisation remained a key driver of demand as the region’s big pharma players sought to modernise their systems, boost the use of machine learning and automation in their R&D function and ensure remote working solutions were as efficient and effective as possible,” the report said.

The public sector also recorded an almost 20 per cent rise in revenue for GCC consultants last year, as government-led economic diversification programmes drove demand for strategy expertise.

“Clients leaned on consultants to update privatisation plans for state-owned companies and boost investment in less well-developed sectors,” the report said.

Financial services and the public sector led the market in terms of overall revenue, followed by technology, media and telecoms.

Cybersecurity remained the fastest-growing consulting service, with revenue up more than 28 per cent to $303m last year, as new solutions were implemented in the region to protect increasingly digitised services, including online citizen services and portals.

“War-gaming and penetration testing was also in high demand across the market as consultants were called upon to identify gaps in existing provisions amid ongoing concerns regarding the robustness of remote work protections,” the report said.

Demand for strategy consulting also rose across the GCC, with revenue rising more than 24 per cent to $838m in 2021, after about a 7 per cent contraction the previous year.

Looking ahead, 59 per cent of client organisations surveyed across the GCC said they expected to spend more on consulting support in 2022 than they did in 2021, the report found.

“Although this proportion is marginally smaller than the 63 per cent who said this last year, it reflects Source’s overall view of 2021, that — leaving aside the impact of the war in Ukraine and consequence of economic sanctions against Russia — 2022 will be another strong year for consulting services with growth rates only slightly lower than last year’s exceptional performance,” the report said.