The management consulting sector of the combined countries of the Gulf Cooperation Council (GCC) – Saudi Arabia, the UAE, Oman, Kuwait, Qatar and Bahrain is now worth over $3 billion. The size of the market is not necessarily surprising, given the importance placed on tapping external expertise by various large firms across multiple of industry sectors in the region. The growth in management consulting market is getting back on track after the dramatic dip in global oil prices in 2016, where the crash took oil prices to as low as $26.21 per barrel and now in January 2020 tracking at around $58 per barrel. Unsurprisingly, the implication of uncertain oil prices has fuelled investment from local GCC governments to further increase their consultancy spend to diversify across non-oil related sectors which has been further exacerbated by the worsening inter-trade agreements in the Gulf, a predicted contraction in global economic growth fuelled by Brexit and The US-China Trade War, and increasing pressure on natural resources.
The Big Three or MBB refers to the name colloquially given to the world's three largest strategy consulting firms by revenue. They are also considered by many to be the most prestigious employers in the management consulting industry. McKinsey is the biggest of these with annual revenue of +$10.5 bn (2018) followed by Boston Consulting Group ($7.5bn revenue; 2018 which is 19% up on the previous year) and then Bain & Company ($4.5bn revenue; 2019).
The Big Four continue to grow their global headcount and revenues. KPMG announced global revenues of 29.75 billion for its 2019 financial year (6.2 percent growth on the previous year) with Deloitte coming in at a whopping $46.2 billion global revenues (up 6.4% percent growth on 2018). EY came in with $36.4 billion (up 4.7% from the previous fiscal year) and $41.3 billion for PwC which is a 4.3% increase over last year’s revenue.
No surprise in that Saudi Arabia remains the largest consumer of consultancy fees with estimates in the region of $1.3 billion. So what lies ahead in 2020 and beyond for the GCC Management consultancy sector? The Crown Prince, Mohammad bin Salman bin Abdulaziz Al Saud is having a huge impact in Saudi Arabia with his Vision 2030 program that aims to diversify the Saudi economy through investment in non-oil sectors including healthcare, technology and even tourism where The Kingdom is attracting international tourists by introducing an e-visa system which can now easily be issued for foreigners from the Internet to attend events and festivals.
The UAE comes in second place with generating an estimated $800m in consulting revenues in 2019. Having visited Dubai only a few months ago, it is hard to avoid the billboards for the Expo 2020 which will be a 1083 acre site between the cities of Dubai and Abu Dhabi and should see a boost in Real Estate, Mobility and Sustainability for the region. The International Monetary Fund (IMF) have already estimated Government spending in Dubai will drive a “rapid acceleration” to more than 5 percent GDP growth by 2020.
Although the Qatar diplomatic crisis continues with many of its’ neighbours, Qatar remains a global leader in liquefied natural gas production so the Energy sector should sustain reasonable growth although some commentators believe the UAE Barakah nuclear power plant could damage Qatar given the Qatari natural gas continues to flow to the UAE and Oman through Abu Dhabi based Dolphin Energy's pipeline and currently meets about 30–40 per cent of UAE's energy needs. Financial Services in Qatar will continue to grow slowly as HSBC, Goldman Sachs and other global banks are intensifying efforts to repair ties with Qatar’s finance ministry and sovereign wealth fund. Tourism will also be on the increase in Qatar with the ubiquitous realisation of The 2022 FIFA World Cup.
Consulting Point predicts that the “disruptive” trends affecting all aspect of commerce across the Gulf will continue to be a major source of activity and growth for all of the Consulting organisations in the region. The government sector will continue to be the industry sector with the largest consulting expenditure but do not underestimate the impact of technology which impacts every industry vertical. Digital transformation is likely to continue its’ growth in the coming years, as clients look to innovative new technologies digitize their operations to achieve long-term savings, become more contiguous with their customers and improve the productivity and efficiency of their business models. Technology has brought about a democratization of vast amounts of data, enabling consultancies to combine big data with analytics, Artificial Intelligence (AI) and automation to help firms move faster with enhanced precision and better decision-making to deliver measurable value through data-driven transformation.
With all this new amount of data, demand for data storage and hence cloud services will only increase as firms in the region migrate from data centres and modernise their existing legacy IT infrastructure to support a new cloud environment. We are slowly seeing financial institutions starting to use cloud-based software-as-a-service (SaaS) applications for business processes that might be considered non-core, such as HR, financial accounting and CRM.
Keeping all this data safe will become paramount and so we predict a sharp rise in Cyber Security which has been prevalent in more developed countries following General Data Protection Regulation (“GDPR”) coming into force. We forecast key customer-centric industries, such as telecommunications, utilities, retail banking and defence companies, will increase their IT security consulting expenditure in 2020 and beyond.
We also anticipate an increase in IT risk and IT internal audit demand in 2020 due to the rise of this plethora of data and information which will only crave greater internal controls to effectively manage technology resilience, crisis management, incident response and recovery.
In terms of sectors to look out for in 2020, then Public Sector is a clear area of significant investment and growth across the region, particularly in Healthcare. As the population increases across the Gulf, there will be greater demand for health services testing the ability of healthcare providers and insurers to maintain rising costs and avoid increasing waiting times. Demand for consulting expertise in providing outcome-based operating models of care, e-Health and predictive or preventive medicines should be prevalent.
The energy sector will remain prominent in 2020. Oil will continue to be the dominant driver of growth in the GCC nations as prices continue to rise slowly. Traditional sources such as oil and gas will find new competitors entering this space with renewable energy investment growing alongside wind, solar and hydro. Upon completion in 2020, the Mohammed bin Rashid Al Maktoum Solar Park will be the largest single-site solar park in the world. Recent events in Australia only highlight the pressure to reduce carbon emissions which will impact the energy value chain in 2020 across the Gulf.
The telecommunications sector should also experience modest growth with increased internet subscribers and the continuation of 5G as the fifth-generation wireless technology for digital cellular networks that began wide deployment back in 2019. Gulf telecom operators should also see growth in their B2B IT and Comms services, nourished through greater digitisation and data usage.
Position: Senior Partner
Expertise: Management Consultancies
Geographies: Global
Rakesh founded Consulting Point in 2003 and has led the company’s quest to find and attract the best management consulting talent in the world.
His prior experience in Management Consultancy with PwC & KPMG Consulting combined with over 21 years of search has proved a potent combination and as a result he is now retained by some of the biggest and brightest names in management consultancy to assist with their talent attraction.
Rakesh has been recognised with numerous awards, including being named as the Best Management Consultant Recruiter of the Year for 6 consecutive years by Top Consultant.
Finally, tourism will be prominent for Dubai in 2020 with an estimated 25 million visitors to Expo 2020, of which 70 per cent foreigners are expected to visit the UAE during the event. A five-year multiple-entry tourist visa system was approved by the UAE Cabinet earlier this month that should Dubai maintain its’ status as the fourth most-visited city in the world based on the number of international visitors.