Dubai: The Gulf’s high value consultancy services market contracted for the “first time in its history” as COVID-19 forced businesses into a rethink on priorities. It could have been even worse were it not for activity in the healthcare, according to numbers provided by Source Global Research.
The decline in consultancy services led to nearly $400 million being wiped off as potential revenues. The market for these services in the Gulf is now valued at about $2.7 billion, according to Source Global.
With COVID-19 breaking out, “nervous clients put consulting projects on hold, particularly in hard-hit industries, such as retail, hospitality, and aviation,” it added.
The consultancy market in the UAE was valued at $580 million in 2020, while that for Saudi Arabia was at around the $1.4 billion mark. Source Global expects both markets to bounce back this year, with double-digit growth.
Lack of movement
“The GCC’s consulting market arguably relies on two things more than anything else: freedom of movement for consultants and reliably high oil prices,” said Edward Haigh, Joint Managing Director at Source Global Research. “So, in a year when consultants were confined not only to their country of residence but even to their homes, and when oil prices were not so much volatile as downright absurd, you can imagine what that did to the nerves of the average consultant in the region.
"It might have felt more painful to GCC consultants, however, partly because the market has never contracted before and partly because the twin-pronged crisis struck so precisely at the market’s Achilles heel."
The healthcare sector provided one of the few healthy deal pipeline for consultants. This category grew by more than 19 per cent, with “ongoing work to define the structure of the Saudi healthcare system” creating an “impressive momentum of its own”.
The 12.4% contraction of the GCC consulting market in 2020 was no worse than the contraction in the global consulting market overall. Now, in early 2021, the prevailing emotion is one of relief: It could have been so much worse
Back to form
But for the GCC’s largest consulting market — the financial services space — 2020 proved an unmitigated setback, with revenues falling by $160 million, according to Source Global’s number crunching. “Banks and insurers put whatever work they could on hold, including lucrative regulatory work,” it said.
“Source expects consultants working in the sector to regain their losses in 2021, however, as banks push forward with ambitious digital transformation projects, spurred on by both customers embracing digital banking and the competitive threat from fintechs.”