A market in transition: consulting in the GCC

Demand for consulting in the countries of the Gulf Co-Operation Council (GCC) has been growing fast since the recession, but for most consulting firms in the region this hasn’t meant a return to business as usual.

That’s been confirmed by our recent round of client research, this time focusing exclusively on the views of almost 150 senior executives in the region.  The impression they give is of a market that’s undergoing significant change.

Around a third of all consulting is driven by the need for specialist skills. “The shortage of skilled labour in the GCC is acute, so we have to buy in a lot of the skills we need from external suppliers,” was a typical comment, in this case from the CFO of a financial services company.  That’s something clients would like to spend less on in the future, not because they're becoming less interested in these skills, but partly because they're under pressure to develop the skills of their own staff rather than relying on outsiders, and partly because many feel they’ve looked to big consulting firms to provide such skills over the past decade and don’t believe they’ve been getting the depth of expertise they think they need.  There are two consequences to this: first, although the volume of consulting support will shrink, the level of skills required will rise; second, clients will not necessarily turn to the big, well-known consulting firms, but to niche firms which are perceived to be more specialised.

If that sounds like bad new for big firms, it isn't neccessarily. After all, there simply aren’t many mid-sized specialist firms in the region. Firms may be able to fly their staff in from the West, but unless they have a sufficiently well-recognised local presence GCC buyers won’t necessarily know where to look in the first place.  Big consulting firms can respond by being clearer to clients about where they have particularly deep pockets of expertise (many clients complained that big firms don’t take the trouble to do this but simply trade on their brand) and/or by acting as a channel, bringing in experts from niche firms where appropriate rather than claiming to be good at everything.

Big firms will also benefit from growing demand for consulting work aimed at helping clients validate difficult decisions, something that ranges from the inevitable rubber-stamping to genuine attempts to consider all the options.  As in the West, this accounts for around a sixth of all consulting (some would say more, if clients were being absolutely honest with themselves), but unlike the West, this type of work looks set to grow in the GCC, driven perhaps by the increasing complexity of organisations and their governance structures.

Big firms can’t, however, afford to be complacent.  The clients we questioned were very clear that if a consulting firm didn’t have the depth of expertise to provide specialists skills in the first market or make the grade in terms of brand and reputation in the second, then they’d be viewed as body-shops, able to provide only the most generic of skills at increasingly low prices.  Having been guilty of offering poor service and mediocre quality in the past, some of the very biggest firms now run the risk of being classed as body-shops.  Their brands will no longer save them.