Since the global financial crisis of 2008 and its aftermath, the consulting industry of the GCC states – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates – has only trended upwards. In 2014 the market broke through the barrier of $2 billion in fee income, according to data from Source Global Research, reaching $3.3 billion before the global pandemic hit the region’s shores.
However, fast forward twelve months, and the GCC consulting industry has contracted by 12%, wiping off nearly $400 million in consultant spending from the sector, forcing consulting firms of all sizes to take – sometimes drastic – measures. The trigger: nervous clients slashing discretionary spending in a bid to curb costs, in the process putting projects on hold and canceling non-strategic projects altogether.
Not surprisingly, consultants in hard-hit industries, such as retail, hospitality, and aviation took the largest hit. The region’s largest industry segment, financial services, saw its total consultancy spend fall by $160 million. “Banks and insurers put whatever work they could on hold, including lucrative regulatory work,” said Edward Haigh, a Managing Director at Source Global Research.
A bright light amid consulting’s gloom: the healthcare sector. Facing its largest healthcare crisis in decades, hospitals and other healthcare institutions turned to consultants to support their Covid-19 response initiatives. Meanwhile, strategic work on Saudi Arabia’s future healthcare system was another major driver, lifting total healthcare consulting spending by just under 20%.
Providing some overall relief, the 12% contraction of the GCC consulting market in 2020 was no worse than the contraction in the global consulting market overall. In addition, the 12% is much softer than the impact which consulting leaders feared at the start of the pandemic-induced downturn. In the second quarter of last year, Middle East-based executives and partners of consulting firms in fact said they expected an 18% drop in fees.
Saudi Arabia remains the GCC’s largest consulting market, currently valued at around the $1.4 billion mark. The Saudi Vision 2030 agenda is the biggest driver of external support, as well as the development of the local tourist industry and more recently the roll-out of its “Programme HQ” relocation initiative. The UAE is the region’s second largest consultancy market, valued at $580 million.
Looking at 2021, consultants in the GCC are expected to rebound strongly and book double-digit growth, according to Source Global Research’s database. Illustrating the rebound, a recent survey by a recruiter found that more than half of large consultancy firms in the region have dialled up their hiring efforts.
With a value of over $55 billion, the US is the globe’s largest consulting market and home to the headquarters of most of the world’s largest consultancies – including the MBB trio of McKinsey, Boston Consulting Group and Bain & Company, as well as Alvarez & Marsal, Oliver Wyman and Strategy&. Accenture and the Big Four are (legally) headquartered in Europe.
Sourced from Consultancy-me.com