30% local content is mandatory in Saudi government consultancy contracts

In a strategic move aimed at deepening the economic impact of government procurement and boosting local industries, the Local Content and Government Procurement Authority in Saudi Arabia announced a minimum local content requirement of 30% in all management consulting service tenders and contracts issued by government entities. This decision is part of a series of ambitious initiatives aimed at achieving the goals of Vision 2030, which prioritizes the development of local content and the empowerment of the private sector.

Historical background and context of the decision

is “local content” a cornerstone of the Kingdom’s economic transformation. The Local Content and Government Procurement Authority was established in 2018 to regulate and promote this trend, working to increase the contribution of Saudi companies, products, services, and talent to the economy. This decision was not made in a vacuum; rather, it builds upon previous policies implemented in other sectors, such as industry and contracting, which have proven effective in localizing industries, transferring knowledge, and creating quality job opportunities for Saudi citizens. The new decision focuses on the management consulting sector due to its importance in policymaking and improving government performance, making it a vital sector for developing strategic expertise.

The importance of the decision and its expected impact

This decision is expected to have multiple positive impacts at the local and regional levels. At the local level, the decision will contribute to the following:

• Empowering local businesses: The decision will give an advantage to small and medium-sized Saudi consulting firms, increasing their competitiveness and giving them the opportunity to grow and expand.
• Creating quality jobs: The decision will encourage global and local consulting firms to employ and train Saudi talent, contributing to building a generation of national experts in vital fields.
• Knowledge and experience transfer: The decision will require major international companies to enter into partnerships with local entities, ensuring the transfer of best practices and international expertise to the Saudi market.
• Boosting the national economy: By ensuring that 30% of the value of contracts is spent within the Kingdom, the local economic cycle will be stimulated and the gross domestic product will be increased.

On the international level, this decision is pushing global consulting firms that wish to operate in the Saudi market to restructure their strategies by establishing regional headquarters in the Kingdom and investing more in local talent and infrastructure, thus enhancing the Kingdom’s position as a leading regional hub for business and consulting services.