The gulf between potential and actual digitisation narrows in the GCC

When it comes to digital, the GCC has been pulling its punches, and a full-throttle digital take-off has not quite happened to the extent that it has elsewhere.

That may be about to change. In our GCC report last year, a number of interviewees expressed optimism about how digital work was likely to increase. Fast forward a year and that optimism appears to have been well-placed: The volume of digital work has grown sharply to a point where it represented just under 30% of the region’s $3,002m consulting market in 2018.

The region’s diversification agenda is driving much of that increase: Large infrastructure projects–such as Qatar’s 2022 World Cup preparations and the 2020 Dubai Expo–are proving to be catalysts for digital uptake, and digital government initiatives have picked up speed. Added to which, unlike in many more mature economies, the absence of legacy systems means there are fewer headwinds than there are elsewhere holding back the realisation of digital initiatives.

Still, the size and rate of expansion of digital work is not quite at a level many had hoped it would be by now. For all the legacy it has to contend with, the digital consulting market in the UK now represents almost half of all consulting revenues, and the Nordic region follows a similar pattern to the UK. So the GCC is still lagging.

Consultants express some frustration at the pace of change. So, what’s holding back the GCC region from embracing digitisation more fully? Well, for a start there’s the controversial issue of low-wage migrants. GCC countries are notorious for their use of poorly-paid migrants in industries such as construction.1 Migrants constitute more than 80% of the workforce in the UAE and Saudi Arabia, and over 95% in the Gulf states.2 The pressures driving digitisation in other regions, such as the quest for greater efficiency, are therefore less prevalent in the GCC.

But other, more entrenched, structural factors may also be barriers to change: The GCC has a reputation as a conservative place to do business. Digitisation projects might be viewed as unnecessary or uncertain outlays by some clients.

What might stimulate faster change? First, pressure from GCC citizens, especially young people, who have some of the world’s highest rates of smartphone penetration and make up a high proportion of the overall population.3 It might be that it’s the people themselves who force up demand for digital transformation.

Second, greater expansion of existing digital projects. Much of the work to date has concentrated on front-office functions, but there is scope for this to extend into the back and middle office.

Third, consultants can play a role in stimulating change through use-cases from other parts of the world and therefore transfer knowledge and best practice. Until these kinds of trends accelerate and notwithstanding the region’s singular development, digital transformation is going to be a little less buoyant than it otherwise could be in the GCC.

1 95% of workers in domestic and construction sectors in the GCC are migrants, International Labor Organization, Labour Migration, (accessed Mar. 11, 2019). Available at: https://www.ilo.org/beirut/areasofwork/labour-migration/lang–en/index.htm
2 International Labor Organization, Labour Migration, (accessed Mar. 11, 2019). Available at: https://www.ilo.org/beirut/areasofwork/labour-migration/lang–en/index.htm
3 In 2015 the median age in Saudi Arabia was 28.3 years and 33.3 years in UAE. As a comparison the median age in the UK was 40.0 years and Germany 46.2 years. United Nations Economics and Social Affairs, World Population Prospects: Key findings and advance tables 2015 Revision, (accessed Mar. 22, 2019). Available at: https://esa.un.org/unpd/wpp/publications/files/key_findings_wpp_2015.pdf

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