PwC’s Saudi Suspension: A Sign of Shifting Priorities.

Here’s a structured breakdown with further details on why Saudi Arabia has found attraction in PwC and the factors leading to its temporary ban:

1. Saudi Arabia’s Attraction to PwC and Foreign Consultancies

A. Vision 2030 and Economic Transformation

Saudi Arabia's ambitious Vision 2030 plan aims to diversify the economy beyond oil, requiring expertise in regulatory frameworks, digital transformation, and economic restructuring.
PwC, along with McKinsey, BCG, and others, played a key role in designing and executing policy reforms, corporate restructuring, and new sectoral initiatives.
Foreign consultancies brought global best practices and strategic frameworks that Saudi institutions lacked, making them indispensable to government projects.

B. High Compensation and Talent Attraction

The Gulf region offers some of the highest compensation packages for consultants, often exceeding those in London or New York, making it an attractive market for firms like PwC.
Tax-free salaries and lucrative contracts for major projects incentivized foreign firms to aggressively expand in Saudi Arabia.

C. Public Investment Fund (PIF) Projects

PwC has been a key advisory partner for PIF, which oversees multibillion-dollar projects in tourism, technology, and infrastructure.
Large-scale projects like NEOM, Red Sea tourism developments, and giga-projects required the expertise of PwC and other global firms.

2. Why Saudi Arabia is Reconsidering Foreign Consultancy Dominance

A. Budget Constraints and Spending Cuts

Oil prices have dropped to a three-year low ($68 per barrel), pressuring government revenues.
Riyadh is reassessing spending, and foreign consultants—often expensive—are among the first to face budget cuts.

B. Push for Saudization (Localizing Jobs and Expertise)

The second phase of Saudization in consulting mandates higher local hiring quotas and penalties for non-compliance.
Saudi professionals are gaining experience in foreign firms and then transitioning into government roles or local consultancies, reducing the need for external expertise.
Many sitting ministers and officials have prior experience in foreign consultancies, illustrating a shift towards local talent taking over strategic roles.

C. Data Sovereignty and Security Concerns

The Saudi Data and Artificial Intelligence Authority is introducing tighter regulations on data storage and processing.
Foreign consultancies have historically had access to sensitive state data, raising concerns about data security and sovereignty.
The use of AI-powered tools (e.g., ChatGPT) in consulting raises further risks related to confidential information management.

D. Rising Local Consulting Firms

Saudi Arabia is encouraging the growth of local consulting firms to reduce reliance on foreign expertise.
Partnerships between global firms and emerging Saudi consultancies are becoming a necessity to operate effectively in the market.

3. Implications of PwC’s Suspension

A. Lack of Transparency in the Ban

Neither PwC nor PIF has publicly clarified the reasons behind the suspension, fueling speculation.
This has intensified discussions on whether foreign consultancies have too much influence over Saudi economic decisions.

B. Broader Warning for Global Firms

PwC’s situation signals that Saudi Arabia is moving towards greater economic independence in consulting services.
Foreign firms will have to rethink their strategies, focusing on retaining Saudi talent, forming local partnerships, and navigating new regulations.

C. Future of Consulting in Saudi Arabia

While foreign consultancies will still have opportunities, competition will increase from local firms.
Firms like PwC will need to adapt to changing regulations, reduced budgets, and higher localization requirements to maintain their presence in the kingdom.

Conclusion

PwC’s suspension is not an isolated event but part of a broader shift in Saudi Arabia’s approach to foreign consultancy. With economic pressures, increased Saudization, and tighter data relgulations, the kingdom is reducing its reliance on external advisors. While the consulting market in Saudi Arabia remains lucrative, foreign firms must navigate a more complex and localized business environment to remain competitive.

Source:

https://www.semafor.com/article/03/06/2025/analysis-pwcs-saudi-ban-is-a-warning-sign

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