A decade on from outset of global financial crisis, GCC consultancy market set to rise

Growth in Saudi Arabia, the GCC’s largest consulting market, will continue to pick up speed in 2018, with a double-digit growth rate returning for the first time in three years .

In 2008, as the employees of Lehman Brothers packed their belongings into boxes and headed for the exits, management consultants packed their wheelie bags and headed for the airport.

The routine was a familiar one for the sharp-suited nomads of the business world - theirs had long been a life spelt out in airport codes - only this time their destination wasn’t New York, London or Frankfurt; it was Dubai.

Like lawyers, consultants can thrive in good times or bad, but while many stayed behind to pick up the pieces, those in search of growth knew that, sooner or later, they needed to spread their wings. And as the chill-wind of an economic winter set in across Europe and North America, nowhere looked quite as inviting as the sun-drenched, growth-filled markets of the Arabian Gulf.

Ten years on, how has that worked out?

From the perspective of growth, the GCC's consulting market started delivering straight away: even in the depths of the global financial crisis, growth was running at more than 20 per cent. While that growth might have been from a small base, it made the GCC look like an incredibly attractive place to be a consultant.

What’s more, unlike in other emerging markets, the GCC was evidently a place in which there was an appetite for consulting. Client organisations – their ranks heavily populated with western expatriates – accepted consulting as a part of doing business in a way that organisations in China, for instance, still don’t. And while GCC clients drove a hard bargain, they didn’t do so to anything like the same extent as their Indian – or even Spanish – counterparts. Day rates in the Arabian Gulf are much more alike those in London than those in Mumbai.

By the admission of many consultants still working in the region, the result was something of a gold-rush, in which tried-and-tested approaches to improving organisations’ performance could be trotted out with relatively little effort, and where the speed with which many clients wanted to achieve their ambitions drove them straight into the welcoming arms of advisors who – they thought – could make things happen. Indeed, even when those advisors had the integrity to tell them that it couldn’t – at least not in the timeframe they were expecting – that seemed to do little to put them off.

But the market quickly matured: Clients started getting smarter and consultants were forced to up their game, so that, between 2011 and 2014, what emerged was an industry that combined maturity and high growth – it really did look like the best of both worlds for consultants, whose role had become central to so much of what the region was trying to achieve.

And then the price of oil crashed.

Had this happened a few years earlier, you suspect that the GCC consulting market might have struggled to withstand the impact: the same wheelie bags that rolled out of the entrance to DXB in 2008 would simply have started rolling back in. But by 2016, when oil prices briefly dipped below $30, the market was worth $2.57bn, and although the growth rate had fallen sharply it was still running at about 6 per cent. Added to which, for many consultants, the GCC had now become home.

What slower growth revealed, though, was that risks had increased sharply. Even where consultants could find reliable sources of work in the region, many were struggling to get paid for it. That led to terse conversations between consulting leaders in the region and their bosses in Europe and the US: “The market’s holding up well - we need to keep investing” they reported. “Then where’s the money?” came the reply.

There was also a growing amount of disquiet about the nature of the work in the region. Consultants were spending most of their time flying from Dubai to the wider region providing strategic advice to clients that seemed ill-equipped to do anything about it. By the end of 2016 the resolve of many consultants was being tested.

Nevertheless, as our report today reveals, the market has clung on, and in 2017 growth actually picked up a little, to about 7 per cent. So, where does that leave us now? The energy that’s been injected into the National Transformation Program (NTP) by Crown Prince Mohammed bin Salman has created momentum that’s unlikely to dissipate any time soon. Consulting work around the NTP has helped Saudi Arabia’s consulting market grow 8.3 per cent to US$1.29 billion in 2017 from US$1.19bn the previous year. Growth in Saudi Arabia, the GCC’s largest consulting market, will also continue to pick up speed in 2018, with a double-digit growth rate returning for the first time in three years

At the same time the UAE looks like an increasingly stable consulting market, and with Expo 2020 just around the corner it’s hard to see that situation deteriorating either. And then there’s the digital agenda, which is creating sweeping and transformational change in just about every sector of the economy. Add all of that together and, for consultants with a stomach for risk, there’s just as much to be excited about in 2018 as there was in 2008. Maybe more.

Edward Haigh is a Director at Source Global Research, a research and strategy firm for the global management consulting industry