Saudi Arabia recovery accounts ... and consulting companies are in trouble

The Kingdom of Saudi Arabia has relied on consulting companies for a few years to pay an expensive restructuring process for its economy. But the appetite of the kingdom towards foreign advisers has begun to decline, which is an additional challenge for a sector facing increasing world pressure. Although Saudi Arabia continues as one of the largest consultation services markets, the rate of granting contracts has begun to delay, according to people familiar with the matter. This has led to the transfer of some companies in their activity to other places, such as Doha, according to one of the persons, who asked not to be identified because this information is secret. This impact includes large companies, such as ‘Boston Consulting Group’, which have expanded employed in the region over the past few years, until the number of employees exceeded a thousand. However, the informed said that dozens of consultants of the company in Saudi Arabia and other wave states are not currently working on projects, known in the sector as the term “on the beach”, which refers to the non -charged advisers with specific tasks. According to some people, this slowdown reflected in reducing posts in other consulting companies, such as the PwC and Ronald Berger. A painful blow for “Price Waterhouse Copers” “Price Waterhouse Copers”, which achieved an annual revenue of $ 2.5 billion from the Middle East last year, received a painful blow a few weeks ago after the public investment fund banned it for a year. The company did not issue an official comment on the reasons for the decision, but in an internal note to its employees indicated that the matter was related to “a problem with customer handling, according to celebrity who confirmed that competitive consulting companies still close the transactions with the fund. “Big consulting companies have dominated the Middle East for years and acquired large contracts from sovereign governments and entities. But the situation has changed,” says Rana Maristani, CEO of R. Consultance Group, in the United Kingdom, which helps companies expand in Saudi Arabia and UAE. Boston Coning Group, Roland Berger, and strategy and strategies did not respond to suspension requests. Financial pressure forms any fundamental change in the traditional dependence on Saudi Arabia on consulting companies a major challenge for the sector, as government departments in Riyadh have always used high salaries consultants to contribute to the formulation of national policy. The contracts concluded by the Public Investment Fund and its subsidiaries alone have probably delivered consultation income from hundreds of millions of dollars. Although the kingdom can reduce its spending on some major projects, the intense investment activity in other areas and the size of its total expenses will remain large. For some companies, the temporary ban on ‘Price Waterhouse Copers’ may be a chance to be present in the market. The Saudi government relies on world networks and extensive experiences of major consulting companies to support the implementation of strategic projects within the “Vision 2030”, according to the “Access KSA”, which provides consulting services and seeks to attract foreign enterprises and investments to the kingdom. In this context, Saeed Al -Seedi, CEO of “Axis Kaa”, said: “(Saudi Arabia) is urgently needed, and you will still need it, but it is a warning bell.” He added: “The kingdom does not spread money, but rather pays a high price for high value and expects to achieve the best quality and the highest level of implementation.” What is the reason for the transformation? This transformation holds partly linked to the decline in the price of crude oil and the high financial deficit, which has affected economic expectations and makes the investment environment more competitive. Consultation companies have an extra challenge to change public opinion. The interaction with the decision to ban “PwC” (PwC) showed signs of local views, as Saudi on social media criticized great spending on international advisers, while others demanded an increase in local employment. Rana Marestani, CEO Consultancy Group, is of the opinion that international businesses often send beginner consultants with limited knowledge of the region, and that they apply Western business models to markets that work according to completely different mechanisms. She added: “There is also the cost factor. Companies and government agencies are starting to wonder about the feasibility of paying millions of dollars in exchange for consultations that can offer artificial intelligence and internal teams quickly and more efficiently at a lower cost.” A global decline passes the consultation sector at an accurate stage, as the slowdown in the Saudi market is in the midst of challenges stretching over major markets, from China and Australia to Africa and Britain. Consultation companies sometimes criticize their collaboration with Saudi parties, while some managers have been investigated before. Saudi Arabia also warned bankers and consultants about possible legal measures as they work with US investigations on their activities in the kingdom. In November 2023, the Saudi public investment fund filed a lawsuit against its advisers in a Saudi court to prevent them from providing information to the US Senate Internal Security and Government Committee. During a hearing before the committee, Michael Klein, banker and one of the most prominent consultants of the fund indicated that violating the judicial order could lead to 20 years imprisonment. Tom Rodinhauser, the administrative partner of “Kennedy Intelligence”, who comments on the general scene of the sector, who monitors consulting companies: “There are many challenges, not least, is the slowdown of China as a growth market, in addition to the withdrawal of Saudi Arabia and the possibility of the US federal government. of using the use of using the use of using the use of using the use of using the use of using the use of using the use of using the use of using the use of using the use of using the use of using the use of using the use of using the use of the use of the use of the sector. Trust, expect analysts a change in the quality of the businesses with which the “Axis KA” business will work together. About a decade ago, when the Kingdom laid the foundations of “Vision 2030”, the focus was on the strategic preparation advisers, who paid the highest drawings and contributed to the development of the vision and the formulation of its comprehensive plans. But as projects of the stage of perceptions and presentations move to the real implementation on the ground, the type of experience needed became different. Consultants in the Kingdom are now facing increasing pressure to provide executive work that effectively guarantees the completion of projects. According to people, businesses that do not adapt to this radical transformation can find it difficult to obtain new contracts. Bahfin Shah, the director of the ‘Secretariat’, who specializes in consulting services: ‘The consultation sector goes through a global stage’, and asks: ‘Is the traditional model of consultation, based on recruiting large numbers of employees to solve problems, stays constantly?’