A consulting boom in Saudi Arabia is slowing as Riyadh reins in spending and reassesses the vast sums being paid to outside advisers to help it pursue its gargantuan infrastructure ambitions.
The kingdom’s consultancy market exploded as it emerged from the worst days of the pandemic, with growth of 38 per cent in 2022 and 25 per cent in 2023, but is expected to expand by just 13 per cent this year after 14 per cent growth in 2024, according to industry research group Source Global.
“The days of the blank-cheque consulting projects, where they just threw money at everything, are really a thing of the past now,” said Dane Albertelli, senior research analyst at Source Global, adding that consultancy firms had felt the boom “might be sustained for a bit longer”.
The slowdown comes as Riyadh grapples with subdued oil prices, the vast scale of its investment commitments and the need to show returns after years of frenzied expenditure, forcing it to tighten its belt and reprioritise its spending.
The kingdom’s powerful Public Investment Fund last month imposed a year-long ban on PwC being given new advisory work, a move many in the sector believe was partially linked to government frustration at the vast sums being spent on consultants to push forward Crown Prince Mohammed bin Salman’s transformation agenda.
“The consultancy fatigue is not getting any quieter — if anything it’s getting noisier,” said one executive at a consultancy working in the kingdom who like others who spoke to the Financial Times did so on the condition of anonymity. They added that the PwC ban “feels like a very specific large-magnitude event that came out of that exact theme”.
Growth in Saudi Arabia and the rest of the Gulf has been a boon for consulting firms struggling with slack domestic markets — PwC’s Middle East revenue expanded by 26 per cent in the 12 months to June 2024, compared with just 3 per cent growth in the UK. Provisional data from Source Global estimates that the consulting market in the Gulf region reached $7bn in 2024, with Saudi Arabia, the region’s biggest economy, accounting for the largest portion.
The kingdom’s so-called giga projects, most notably new economic area Neom and its futuristic linear skyscraper city, have provided a feeding frenzy for the industry. The PIF, the sovereign wealth fund that is the dominant force behind Saudi infrastructure commitments, drove huge demand for advisory work.
The kingdom’s need for help to formulate strategies for establishing everything from new economic areas to an entertainment industry provided a steady stream of business for strategy consultants at firms such as McKinsey, BCG and Bain.
To move fast in setting up these projects the state, the PIF and its subsidiaries hired armies of consultants to beef up their workforces — a practice known as body-shopping — including from the so-called Big Four consultancy firms.
But all the spending has led to “massive disquiet that Neom was spending way, way too much money on consultants,” said one person familiar with the project. Neom “was getting ripped off . . . there’s a much broader question about the consulting firms and how they’re taking advantage of the giga projects.”
The worries about how much money was flowing to consultancies come as oil production cuts and lower prices have constrained government expenditure in an economy that is diversifying but still relies on crude exports.
National oil company Saudi Aramco this month slashed its 2025 dividends by 30 per cent after a 12 per cent drop in net income last year to $106bn. The cut in payments will hit the coffers of Saudi’s government and the PIF, which owns 16 per cent of Aramco.
The kingdom has also struggled to attract foreign direct investment to help fund the trillions of dollars needed for bin Salman’s “Vision 2030” projects. While Saudi Arabia is targeting $100bn of annual inbound investment by 2030, it secured just $22bn worth of capital expenditure into green or brownfield projects last year, according to data from fDi Markets.
As it exercises greater restraint on costs, consultants are facing pressure on fees.
“It’s kind of a race to the bottom on who is going to discount,” said one regional consulting boss. “That consulting market, which was flying a couple of years ago, is now a really difficult environment”. They said their margins were “half or 60 per cent” of what they made two years ago
Not every firm is offering steep discounts, however. One executive at a boutique consultancy said it had brought prices down by less than 5 per cent because “no one has in mind what the cost should be, it should just be less”. At Saudi ministries it is “fashionable to hear that ‘the boss wants to cut costs’,” they added.
But the price pressure is partly the result of intensified competition because of the firms’ rapid expansion in the region. Albertelli said consultancy and accounting firms piling into the Gulf had created a “buyers’ market”, where clients had greater choice and more power to dictate price.
The Saudi market still represents a huge opportunity as the government continues to spend heavily on an array of projects, according to the industry insiders. But the type of work is changing, with the government now needing specialised expertise rather than manpower to get projects off the ground.
Consultants still expect demand to stay high, especially as Saudi Arabia has hard deadlines to meet for projects such as the 2029 Asian Winter Games, which will require man-made ski slopes, and the 2034 football World Cup.
But many believe a slowdown was inevitable. “People within the industry have expected a reckoning on the value-for-money question for some time,” said an executive at one of the biggest consultancies.
