Booming consultancy offers jobs in Middle East as banking fades

It’s a great time to be a consultant in the Gulf Cooperation Council. Less so for bankers. Demand for consultants and consultancy firms in the region was much stronger than expected in the first quarter and is set to stay that way for the remainder of the year, according to recruiter Morgan McKinley. By contrast, hiring by banks slumped 60 percent in the three months through March and isn’t likely to improve by December, it said. "If you’re a consultant, business is booming," Trefor Murphy, managing director of Morgan McKinley in the Middle East and North Africa, said in an interview. "There’s huge demand in places like Saudi Arabia and the United Arab Emirates as they transform their economies. Many bankers, on the other hand, will be struggling to hold down their job." Demand for management consultants in the GCC is soaring as countries such as Saudi Arabia seek ways to reform their economies after a 70 percent decline in the price of oil since 2014. Consulting firms earned $2.7 billion in the region last year, a 9 percent jump from the year earlier, according to London-based Source Global Research, which tracks the management consulting industry. Banks in the United Arab Emirates have shed more than 1,500 jobs, according to financial recruiters and Bloomberg calculations. "Every consultancy firm in the U.A.E., Saudi Arabia, Qatar, Kuwait and Bahrain is hiring at the moment to stay ahead of the game," Murphy said. "Most banks, on the other hand, have a hiring freeze on." Saudi Arabia Consultancies are set to earn 12 percent more in commissions in Saudi Arabia this year, the fastest growth among the world’s largest advisory markets, according to Source Global. At $1.3 billion, the Saudi fee pool in 2016 will probably be 60 percent higher than it was four years ago, the data show. Last year, the Kingdom accounted for almost half of the GCC consulting market at $1.25 billion, Source Global said. The government of King Salman is cutting spending, delaying projects, tapping foreign reserves and issuing debt as it takes on a budget deficit expected to reach about 17.8 percent of economic output this year, according to Riyadh-based Jadwa Investment Co. "The scale of the challenge facing Saudi Arabia in diversifying its economy is also a huge opportunity for consulting firms," Edward Haigh, director of Source Global Research, said in an e-mailed statement Thursday. "However, the big question for consultants is how long the Saudi government will keep spending against a backdrop of dramatically reduced oil revenues." Banker Exodus Many bankers who have been dismissed may be forced to leave the region after the number of jobs available in the U.A.E. fell by 9 percent at the end of 2015 and lenders increasingly use consulting firms for short-term projects, Morgan McKinley said. HSBC Holdings Plc laid off about 150 employees at its retail, commercial banking operations in the U.A.E., people with knowledge of the matter said in November. Standard Chartered Plc also cut about 100 positions at the end of the year, the people said, asking not to be identified because the matter is private. BNP Paribas SA was considering more than 100 job cuts in October, two people with knowledge of the matter said at the time. European Lenders Banks in the GCC aren’t the only ones facing a difficult 2016. European banks also have a grim year ahead. John Cryan, Deutsche Bank’s co-chief executive officer, said last month that he doesn’t expect the German lender to post a profit this year, while UBS CEO Sergio Ermotti said he expects “challenging conditions” continued into the first quarter. The European firms have been scaling back for years by cutting jobs, exiting some fixed-income assets and shrinking their geographic footprint amid regulatory pressures and a slump in trading revenue. Credit Suisse AG has also been eliminating jobs at its debt-trading units as stricter capital requirements erode returns. GCC lenders are bracing for a rise in bad debt after oil’s plunge meant that some companies are struggling to make debt payments. Banks in the region are also struggling with tightening liquidity as revenue from energy resources declines and governments pull deposits. "It’s going to be a while before things change, even if oil returns," said McKinley’s Murphy. "With Expo 2020, Qatar 2022 and Saudi Arabia’s privatization plan, there will still be an overuse of consultants, while banks may be cautious about hiring." (By Stefania Bianchi/Bloomberg)

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