What next for the GCC consulting market?

The GCC consulting market has added $1bn to its value in the space of just three years. That’s roughly equivalent to the size of the entire Swedish consulting market: it’s a lot of growth.

But can we expect this to continue or are we about to enter a new phase for the market?

The argument in favour of growth continuing at its current rate (or at an even higher rate) goes something like this: clients (the end-customers of consulting services) are busier in the GCC than they are pretty much anywhere else in the world. Asked recently by us about a range of initiatives they were planning in the course of the next 12 months, in only one case – mergers and acquisitions – did fewer than 90% of respondents to our survey say they had something planned. And in most cases more than 50% of those saying they’d be undertaking those initiatives said they’d be turning to consultants for help. So the basic drivers of growth are very much in place, and look better here than they do just about anywhere else in the world.

Add to that the rate of economic growth across the region, and the urgency with which GCC governments are trying to address issues from physical and social infrastructure, to the need to diversify economies away from oil, and you have a potent mix. And then there’s the chronic shortage of talent with the ability to make all these things happen. It’s the stuff consultants’ dreams are made of.

But there is a counter-argument, too. It starts with the idea that growth is already slowing: the GCC consulting market grew by 15.4% in 2014, and while that’s still a remarkably healthy level of growth, it’s a notch lower than it has been for the last few years. What’s happening in the UAE may be the most telling in this respect: growth in the consulting market here has dipped below 10% for the first time since we’ve been tracking it, and while there’s every chance that it could bounce back up in 2015, the slower rate of growth is entirely consistent with what we might expect at this stage of its development. Take, for example, the fact that, relative to the size of its host economy, the UAE consulting market is already pretty big. In fact, measured by its size relative to GDP it’s about the same size as Germany’s and not all that far behind management consulting’s oldest market: the US. In theory there’s no reason why it shouldn’t end up getting a whole lot bigger, but in practice most major markets seem to have a ceiling – a point at which clients start pushing back against the extent to which the use of consultants has taken hold within their organisation.

Then there’s the issue of what’s happening with the price of oil. The consensus among consultants we’ve spoken to is that low oil prices are having relatively little impact yet, but that the longer they remain low, the more their impact is inevitable. And there seems to be little let up in sight at the moment.

Lastly, just as the issue of talent affect the region’s clients, so it affects its consulting firms. Were they able to source all the talent the region needs, and supply it at a price clients would bear, consulting firms would be doing even better. But at the moment they can neither find as many of the sort of people they need, nor get them to where they’re needed. Especially when they’re needed in Saudi Arabia. And that makes it very difficult for the market to fulfil any theoretical potential, even if everything else was in place.

On balance, this ends up looking like a good old-fashioned tussle between the immovable object and the irresistible force, and we suspect the result is that there will be no major movement in the growth rate one way or another. But it’s a reminder that were either the irresistible force or the immovable object to weaken, we could see a significant swing in either direction.