The Dubai International Financial Centre (DIFC) district of Dubai. Photographer: Natalie Naccache/Bloomberg
DUBAI: The famously difficult road to partnerships and promotions at some of the world’s largest consulting firms can run through the Middle East these days.
Globally, the industry is in the throes of an extended slump, growing just 3% to US$250bil in 2023, according to Source Global Research, which focuses on mid and large-sized firms.
In the Gulf, the pace of increase has been four times that as governments spend trillions on nation-building and dealmaking.
That’s fuelled expansion sprees by behemoths like McKinsey & Co and Boston Consulting Group Inc (BCG).
At McKinsey, some executives choose to take positions in the Gulf because they see it as a stepping stone for career advancement and partner roles, sources said.
The firm employs more than 1,000 consultants in the Middle East, up sharply from pre-pandemic years, they said.
At rival BCG, some senior leaders are based here and the firm counts Saudi Arabia’s US$925bil sovereign wealth fund as one of its largest customers, the sources said.
To be sure, the race to capitalise on the Gulf’s oil wealth comes up against a backdrop of escalating hostilities between Iran and Israel.
Coupled with that, crude prices have averaged about US$80 over the past two years after having surged to well over US$100 in 2022.
Executives said government entities in the region have grown more demanding, and are starting to push for lower fees.
Saudi Arabia has also slashed growth forecasts recently and has been paring back work on some of its ambitious projects, which has the potential to cut demand for consultants in some areas.
Still, multiple senior executives interviewed by Bloomberg said the consulting industry is expected to be one of the more resilient sectors in the Gulf.
It’s a simple playbook: Consultants thrive by working very closely with Middle Eastern governments, providing expansionary advice during booms and restructuring proposals in downturns.
“Behind every single big project in the Gulf they have a consulting team,” said Hagop Panossian, a senior lecturer at the American University of Beirut, who’s seeing many new graduates nab high-paying jobs in the sector.
The Dubai model
For McKinsey and BCG, the region ranks among the strongest globally based on revenue and profitability.
BCG has influential names like Saleh Al-Ateeqi, who joined the firm in 2023 from the Kuwait Investment Authority’s London arm that he helmed for four years, and Ihab Khalil, who has extensive experience working with sovereign wealth funds and regional investors.
BCG also employs more than 1,000 consultants in the region.
Representatives for McKinsey declined to comment. BCG didn’t respond to a request for comment.
Adding to the demand, some consulting firms have been providing employees on a secondment basis to staff entire departments at entities based in the Middle East, sources said.
The activity continues despite escalating violence in the region. One executive said the conflict hasn’t had a big impact yet and entities are still pursuing investment plans, although any escalation could impact the business environment.
As a result, entry-level compensation in Gulf capitals for consultants can eclipse London even without adjusting for taxes, they said.
In Riyadh, a city that expatriates have long avoided because of its strict social norms, fresh recruits at BCG can secure a monthly tax free salary of about US$10,000 a month, higher than the median base pay listed on Glassdoor for US associates at the consulting firm, according to sources.
The dependence on outside expertise has been a feature of the region’s transformation for years.
The most prominent example, perhaps, is the Middle Eastern business hub of Dubai.
The city leaned on consultants for developments including the iconic man-made island of Palm Jumeirah, said Jim Krane, a fellow at Rice University’s Baker Institute for Public Policy in Houston.
The Palm is now at the centre of the city’s luxury housing boom, that’s drawn billionaires from around the world.
When the emirate revived a similar project years after it was halted, buyers lined up for million-dollar homes.
While Dubai started its transformation decades ago, Saudi Arabia is in the midst of its own cycle of economic and societal changes.
Other cities in the United Arab Emirates (UAE) are ramping up ambitious plans of their own, moves that could potentially mean more business for consulting firms.
“I’d bet the consultants responsible parlayed Dubai’s big wins into a lot of new business around the Gulf,” Krane said.
Advancement in AI
One strategic goal is advancement in artificial intelligence (AI).
The UAE and Saudi Arabia are spending billions to build expertise in semiconductors, AI and data management.
Some of those ambitions have drawn scrutiny in the United States, where officials are concerned over the region’s ties to China. Still, consulting firms are staffing up in the tech space.
For instance, the head of Oliver Wyman Quotient – which was launched in June as a global offering that combined the firm’s AI expertise and tools – is based out of the Middle East.
“For us, this region is one of our strongest globally,” said Nick Studer, chief executive officer of the New York-based firm said in an interview.
Still, the firm is “careful about the work we take on, so in a region that can be contentious we tread carefully,” he said. — Bloomberg
