How GCC Governments Are Rethinking Their Consultancy Strategies

In recent years, governments worldwide, including those in the Gulf Cooperation Council (GCC) countries, have found themselves increasingly dependent on external consultancy services to address a wide range of public sector challenges. From strategic planning to digital transformation and infrastructure development, consultancy firms have become integral partners in the public sector's quest for efficiency, effectiveness, and innovation. However, this rising reliance on consultants has raised concerns about sustainability, cost-effectiveness, and the growing demand for in-house capabilities. This article explores the dynamics of balancing consultancy spending with in-house capabilities, highlighting both the challenges and strategies implemented by GCC countries, with a focus on recent developments.

The Growing Role of Consultancy in Government Projects

Consultancy services have long been a key resource for governments across the globe. In the GCC region, governments have engaged major consultancy firms for crucial projects in areas like economic diversification, digital transformation, and infrastructure development—critical components of the Vision 2030 agendas in countries like Saudi Arabia, the UAE, and Qatar.

For instance, in Saudi Arabia, the government has been heavily investing in consultants to support its Vision 2030 transformation plan, with a strong focus on diversifying the economy away from oil dependency. Consultancy firms have played a crucial role in advising on public sector reforms, privatization, and the development of new industries such as tourism and entertainment. According to reports, Saudi Arabia’s Vision 2030 plan has already seen consultancy firms securing large contracts for implementing strategic and governance projects, with companies like McKinsey, Boston Consulting Group (BCG), and PwC advising on the transformation of key sectors.

Similarly, in the UAE, consultancy firms have been key players in the country’s ambition to establish itself as a global hub for technology, innovation, and business. The UAE government continues to rely on consultancy expertise to push its smart city initiatives and enhance its digital infrastructure, such as the Dubai Future Foundation's projects, aimed at shaping the future of urban living through technology.

The Push for Reducing Consultancy Spending

Despite the growing reliance on consultancy firms, there is a clear push from governments, including those in the GCC, to reduce spending on external consultants. This is driven by multiple factors, including the rising costs of consultancy contracts, the desire to build local expertise, and the need for more sustainable models of governance.

In the UAE, there have been calls from local authorities to reduce consultancy spending in favor of developing homegrown talent and expertise within the public sector. The UAE has made significant strides in creating capacity within government institutions to reduce its reliance on external consultants. For example, the Dubai Government has been increasingly focused on upskilling its workforce through training programs and leadership development initiatives.

Similarly, in Qatar, the government has embarked on a long-term strategy to build a more robust public sector by investing in human capital development. The establishment of the Qatar National Development Strategy focuses on enhancing the capabilities of local institutions, with a key emphasis on knowledge transfer from external consultancies to in-house teams. The Qatar Development Bank (QDB) has also supported local entrepreneurs and businesses to reduce dependency on external consultancy services.

Challenges of Balancing External Consultants with In-House Expertise

Despite these initiatives to build in-house capabilities, challenges remain. One major challenge is the sheer scale and complexity of the projects governments are tackling. Many of these projects, particularly those related to governance reforms, economic diversification, and large infrastructure developments, require specialized knowledge and experience that public sector teams may not possess.

For example, in Saudi Arabia, the government has faced difficulties in reducing its reliance on external consultants in its push for digital transformation. As the government continues its efforts to modernize its services, it has turned into large consultancy firms to guide the development of new technologies and platforms such as the "Absher" e-government platform, which simplifies the interaction between citizens and the government.

Another challenge is the difficulty of retaining skilled workers in the public sector. The lure of higher salaries and diverse career opportunities in the private sector means that government institutions often struggle to retain the talent necessary to build sustainable in-house capabilities. This leads to continued reliance on consultants to fill the gaps.

The Strategic Balance: A Path Forward

The key to achieving the right balance between in-house capabilities and external consultancy services lies in adopting a strategic approach that leverages the strengths of both models. Governments in the GCC have recognized that while consultants are essential for providing specialized knowledge and an outside perspective, the long-term goal should be to build local capacity and knowledge within public sector institutions.

To achieve this, governments need to focus on the following:

1. Investing in Human Capital: Governments should prioritize training and development programs that upskill their workforce and create more opportunities for leadership positions within the public sector.
2. Strategic Use of Consultants: Consultants should be brought in for high-value, complex projects that require specialized expertise. However, their role should be clearly defined, with knowledge transfer mechanisms in place to ensure that the public sector gains lasting capabilities from their engagement.
3. Public-Private Partnerships (PPP): Governments should explore models of collaboration with consultancy firms that allow for long-term relationships, where external expertise is integrated into local teams to build sustainable expertise.
4. Performance-Based Contracts: To reduce costs, governments could explore performance-based contracts with consultants, ensuring that external engagement is directly tied to tangible results and outcomes.

The balance between consultancy spending and in-house capabilities is a critical issue for governments, particularly in the GCC region, which is undergoing rapid transformation through ambitious Vision 2030 programs. While external consultants provide essential expertise and guidance for large-scale projects, governments are increasingly focused on developing their internal capabilities to ensure sustainability and cost-effectiveness. Moving forward, a strategic combination of skilled public sector teams, external consultancy expertise, and long-term partnerships will be key to achieving the desired balance.

At PFC, we specialize in helping public sector organizations navigate these complex challenges. Our tailored strategies help governments optimize their use of consultancy services while building in-house expertise to ensure long-term success. If you’re looking to achieve a sustainable balance in your organization, contact us today to learn how we can assist you in this transformative journey.