Background

  • Our clients have since become major consultancy firms in Russia, recognized for their rise in ratings by Expert RA on Russian consulting, with notable clients such as Rosneft, Rusnano, and GazpromNeft.
  • They aim to expand their business into the UAE to tap into the lucrative and growing Middle Eastern market.
  • They seek to understand the market sizing, pricing structure of consultancies, project outsourcing dynamics, payment conditions, market saturation, and the scope of financial services in the region.
  • Point Consultancy has been selected to conduct a financial consulting market landscape study for its clients.
  • This report aims to shed light on various aspects of the financial consultancy market through desk research and in-depth interviews with professionals.

Research Design

To address your specific requirements, we have conducted desk research along with 15 in-depth interviews (IDIs) with financial consultants and IT integration providers to compile this report.

Report

Understanding UAE Financial Market Consultancy

Global Consultancy Industry

Over the past decades, the global consulting market has blossomed into a multi-billion dollar powerhouse. This industry has not only grown in size and prestige but also expanded its international footprint. Today, it’s one of the most advanced segments within the professional services field.

However, defining this market isn’t straightforward. The consulting industry offers a vast array of services across various industries, functional areas, and regions. As a result, different organizations and analyst firms, like the Management Consultancies Association in the UK and ALM Intelligence, use their own definitions. This leads to varying estimates of the market size, with figures ranging from just over $100 billion to $280 billion.

Consultancy in the GCC

The consulting market in the UAE shares many similarities with those of its neighboring GCC countries. One of the largest consumers of consulting services in the UAE is the public sector. The government’s efforts to diversify the economy away from oil have significantly increased the demand for advisory work. Between 2016 and 2019, the consulting industry in the UAE grew by 12%, reaching $1.2 billion, which is 3% higher than the average growth rate across the GCC between 2018 and 2019.

Our analysis also reveals that private sector firms are major consumers of consulting services. Key industries driving this demand include information technology (IT), healthcare, financial services, real estate, and manufacturing. These sectors seek consultancy to navigate their challenges and optimize their operations.

Overall Market Size of Consultancy in the GCC

According to Source Global Research, the overall consultancy market in the GCC experienced a significant decline of 12% in 2020, reaching a valuation of $2.7 billion. This downturn was primarily attributed to the COVID-19 pandemic, which led many clients to pause their consulting projects. Industries heavily impacted by the pandemic, such as retail, hospitality, and aviation, witnessed a particularly pronounced slowdown in consultancy activity.

However, the pandemic also accelerated the urgency for digital transformation across various sectors. With remote working, online shopping, and digital services becoming the new norm, organizations were compelled to prioritize digital initiatives. This heightened focus on digitalization created new opportunities for consultancy firms to support businesses in adapting to the rapidly evolving digital landscape.

Defining Financial Consultancy

Defining financial consultancy presents a considerable challenge due to its multifaceted nature. In this research report, we have refined the definition to align closely with our clients’ expectations.

Financial consultancy, as defined for our research, encompasses a range of services including:

  • Auditing
  • Advisory on Financial Matters
  • Taxation Advisory
  • Management Consultancy
  • Finance Advisory and Wealth Management Consultation
  • Financial Software education and implementation

Given the diverse interpretations of financial consultancy, it was essential to consider multiple definitions to ensure a comprehensive and fair representation of the industry’s practices and expectations.

The UAE Consultancy Market: Dynamics and Challenges

In the UAE, clients place significant emphasis on the brand reputation and management standing of consultancy firms, leading to the dominance of larger firms in the market. Feedback from consumers of consulting services reveals a strong preference among management and board of directors for established, larger firms over smaller boutique firms. Additionally, local and state-backed organizations show reluctance to engage with smaller firms, further limiting their opportunities in the market.

Despite the competition between large and boutique firms, both encounter a common challenge: consulting services are often viewed as discretionary spending in the UAE. The market, although young and burgeoning, grapples with the perception among potential clients who have yet to fully grasp the value that external consultants can bring. Consequently, during periods of financial strain, budget allocations for consulting services are drastically reduced or eliminated altogether.

In response to these attitudes, consultancy firms have adopted creative strategies to win and retain clients. One prevalent approach is the cultivation of strong, long-term relationships with clients to instill trust and increase the likelihood of repeat business. Clients express a preference for continuity, often favoring the same individuals and dedicated teams within a consultancy firm throughout a project’s lifecycle. Even when presented with cheaper alternatives from unfamiliar firms, clients tend to stick with incumbent consultants with whom they have established rapport and familiarity.

Navigating the Impact of COVID-19 on the UAE Consultancy Market

Before the arrival of the COVID-19 pandemic, the consultancy industry in the UAE was on a robust growth trajectory. Projections foresaw a surge in demand for consulting services, especially in the public sector, where the government aimed to modernize service delivery through technological advancements. Similarly, in the private sector, there was a burgeoning need for support in digital transformation initiatives.

However, the pandemic brought about an unexpected turn of events, causing a sharp downturn in the UAE economy, with a staggering 7.8% contraction in the second quarter of 2020. This downturn prompted businesses to swiftly implement cost-cutting measures, including reducing discretionary spending and implementing widespread layoffs. Reports published just two months into the crisis painted a grim picture, forecasting losses exceeding 19% for the consulting market in the Middle East region.

The ripple effects of the pandemic were keenly felt across the consultancy industry in the GCC. With many firms utilizing the UAE as a regional hub for projects spanning various markets, the imposition of movement restrictions and the halting of financial flows had profound implications. Border closures and grounded flights rendered it impossible for consultants to travel to client sites, disrupting project timelines and straining client relationships.

A managing director at a boutique strategy consulting firm in Dubai shed light on the challenges posed by travel restrictions, highlighting how they led to project delays and adversely impacted client engagements. The consultancy landscape in the UAE faced unprecedented hurdles as it grappled with the repercussions of the pandemic, requiring firms to adapt swiftly and creatively to navigate the evolving landscape.

Historical Trend of Consultancy in UAE 

The UAE’s financial consultancy sector has steadily grown at a rate of 20% annually, driven by increasing local demand for problem-solving services. Expected to expand 2.5 times by 2025, with 2022 as a pivotal year, marking a return to pre-pandemic levels.

The financial consultancy industry is divided into three main segments: Advisory (Audit and Tax), Consultancy (Management and Finance), and Restructuring (Digitization of Accounts and Accounts Management). From 2022 onwards, Taxation is expected to drive significant growth, especially with the implementation of Corporate Tax from 2023. Organizations with CBCR, BAPS, and OECD requirements will need to ensure compliance with financial statements accordingly.

Financial Consultancy in UAE 

In recent years, the UAE has emerged as a leading global hub for the consulting industry. This growth is primarily driven by substantial demand from the public sector, which is actively working to diversify the economy away from its traditional reliance on oil. The UAE has successfully implemented strategies to support economic diversification, attracting a surplus of businesses and investments from around the world. Key incentives include free trade zones, 100% capital repatriation, and favorable corporate taxation policies.

The UAE’s strategic location, coupled with its excellent connectivity via land, sea, and air routes to major cities and ports, positions it as a pivotal gateway to various regions, including the GCC, the Middle East and Africa (MEA), MENAT regions, Europe, and Asia. This connectivity makes it an attractive base for multinational firms seeking access to diverse markets.

Moreover, the UAE’s business-friendly policies have positioned it as a global hub for small and medium-sized enterprises (SMEs), which comprise 95% of the economy. These SMEs cater to a wide range of clients across various industries and geographic locations, further enhancing the UAE’s appeal as a business destination.

Top firms servicing the current industries 

In the UAE, government-controlled organizations such as ICD, ENOC, and ADNOC are the leading sectors, followed by multinational corporations. Financial services including banking and insurance, as well as real estate, healthcare, and transport, closely trail behind.

The top four companies continue to dominate, driving 50% of the overall revenue in the industry, while medium-sized firms earn the next 30%, and small firms account for the remaining 20%.

Interestingly, the distribution of clients per firm follows a reverse order. Small firms attract 50% of clients in the long tail distribution, medium firms secure 30%, and the top firms receive the remaining 20%.

Large Firms

How are the top 4 performing?

Assessing Firms on Quality and Price Premium

Portfolio Services

The top four firms compete in conventional services, with KPMG offering the leanest portfolio and E&Y having the most comprehensive list. KPMG stands out with its focus on deals, while E&Y differentiates itself with strong offerings in technology and managed services. Additionally, both Deloitte and E&Y include sustainability in their portfolios.

Clientele

The top four firms rely not only on multinationals for their revenue but also benefit from a diverse range of clients in the UAE. The construction, healthcare, and hospitality sectors offer unique opportunities not commonly found elsewhere. The UAE’s construction industry is poised to surpass $100 billion, experiencing significant growth. Meanwhile, the healthcare and hospitality sectors have shown remarkable resilience, expanding at double-digit rates and providing lucrative opportunities for both small and large firms.

Small and Medium Firms

Here are the rest of the firms performing.

Small and Medium-Sized Consultants (SMCF) in Dubai

Dubai’s strategic location at the crossroads of three continents makes it an attractive hub for small and medium-sized consulting firms (SMCFs). These firms leverage Dubai’s favorable business environment to expand their business development efforts and enhance their service offerings to surrounding regions.

Location and Operations

Many SMCFs use Dubai as a base but conduct much of their work in other countries. These firms often service markets in East, South, and Southeast Asia (particularly India), as well as the Kingdom of Saudi Arabia (KSA), Qatar, Bahrain, and parts of Africa, especially North Africa and the Sahel region. 

Role in the Market

SMCFs typically have fewer employees, with the majority of respondents indicating they have 25 employees or fewer. Only 4% of SMCFs reported having over 100 employees. This smaller size allows for agility and a unique value proposition, especially for smaller enterprises that might not be well-served by larger consulting firms. 

Client Distribution

SMCFs have a diverse client base, with an even distribution across companies of different sizes. Approximately 40% of SMCFs indicated that small and medium-sized companies make up less than 25% of their clients, while about 60% have large-sized companies as clients. This demonstrates the flexibility and broad appeal of SMCFs in the market.

Methodology

A popular approach among SMCFs is to develop bespoke strategies for each client, drawing on multiple disciplines. This method, although time-intensive, is favored by over 85% of the smaller firms (those with 25 employees or fewer). Larger firms (100+ employees) also employ this methodology. The approach is used across firms of all revenue brackets, with those earning between $250,000 and $1 million using it most frequently.

Revenues

There is a positive correlation between the years of operation and revenue, as well as the number of employees and revenue. Nearly half of the firms in operation for over 20 years earn more than $1 million annually. The two firms with the highest earnings (over $10 million per year) also have the largest number of employees (100 and 600 employees, respectively). 

Service Offerings

Niche industry expertise tends to lead to higher returns. For instance, the top-earning firms specialized in insurance and architecture & tourism. This specialization allows these firms to offer targeted, high-value services that command higher revenues.

In summary, SMCFs in Dubai benefit from the city’s strategic location and business-friendly environment. Their agility and bespoke service methodologies allow them to cater to a diverse range of clients, from small enterprises to large corporations, across various regions. This unique positioning helps SMCFs fill market gaps left by larger consulting firms.

Disruptive Consulting Practices in SMCFs

The landscape of consulting practices is evolving towards non-traditional business models, reshaping how consulting firms engage with clients and solve problems. Traditionally a labor-intensive industry, consulting is now seeing a proliferation of digital tools and methodologies aimed at increasing operational efficiency. According to CBInsights, technological disruption is impacting four key consulting functions: information, insight, expertise, and execution.

Technological Disruption

  1. Information Gathering and Analytics

Digital platforms like Looker and Tableau are revolutionizing information gathering and analytics. These tools integrate performance data, business intelligence, and analytical capabilities, enabling clients to bypass the need for external consultants.

  1. Expertise Access

Companies traditionally relied on consultants’ expert networks. However, platforms like Pariti and AlphaSights now offer direct and easy access to pools of experts. Freelance networks, such as Business Talent Group and UpWork, have streamlined project management and made execution more cost-effective.

  1. Remote Work Adoption

The COVID-19 pandemic accelerated the adoption of remote work and related digital technologies. This shift has challenged SMCFs, as they must bridge the gap between available technological capabilities and their effective application to business problems. Remote work also enables consultants to gain virtual insights into clients’ operations, challenging the notion that physical interaction is essential for strategic advice.

Implications for SMCFs

The move towards digital solutions highlights the need for SMCFs to adapt by integrating these technologies into their service offerings. The ability to leverage digital tools and methodologies can enhance their competitiveness and efficiency.

Cross-Pollination of Expertise

To remain competitive, SMCFs must foster cross-pollination of expertise, experience, and complementary offerings. Collaborating and sharing knowledge within the consulting ecosystem can lead to innovative solutions and better client outcomes.

Clientele 

The top four consulting firms not only depend on multinationals for revenue but also benefit from a diverse range of clients in the UAE. The construction, healthcare, and hospitality sectors offer unique opportunities that are not typically found in other regions. The UAE’s construction industry is expected to surpass $100 billion as it continues to expand rapidly. The healthcare and hospitality sectors have shown remarkable resilience and are experiencing double-digit growth, benefiting both large and small consulting firms.

Small- and medium-sized consultants (SMCFs) often follow a traditional path to success: they focus on the UAE’s high-performing industries and leverage Dubai’s strategic location as a hub connecting Africa, Europe, and Asia to enhance their business development efforts. This approach helps them tap into the lucrative opportunities available in these thriving sectors and expand their reach across multiple continents.

Legal and Regulatory Framework

How to set up a shop in the UAE

Legal Framework

Dubai is a major financial and trade hub in the Middle East, making the financial consultancy license a popular business category.

Where to Set Up a Financial Consultancy in UAE

Financial consultancies can be established in both the Mainland and Free Zones of the UAE. Pre-approval from the Security Commodity Authority (SCA) is required to process the financial consultancy license.

Dubai International Financial Centre (DIFC)

The DIFC is the epicenter for financial companies and consultancies in the UAE. Located in the heart of Dubai, it is one of the busiest financial hubs in the Middle East. As a Free Trade Zone, DIFC offers entrepreneurs 100% ownership of their companies, zero income and corporate tax benefits, and access to world-class amenities.

Mainland UAE

The Mainland is also an ideal location for setting up a financial consultancy. The Department of Economic Development (DED) in Dubai issues financial consultancy licenses, allowing investors to establish an LLC or a Professional Services company.

Documents Required for Starting a Financial Consultancy in Dubai

The process for setting up a financial consultancy in Dubai involves straightforward steps with minimal documentation. The requirements may vary slightly depending on the chosen business jurisdiction:

  • Shareholder details: passport copy, photograph, CV
  • Free Zone/DED Company Registration Form
  • Business Plan (optional) for Banks and Approval Authorities (SCA)
  • SCA Special Approval Form

Fees for the License

The fee for a financial consultancy license in Dubai varies by business jurisdiction and other factors such as visa quota requirements, facilities, and office space. 

  1. LLC Mainland Company: Without office space and visa, the cost is around AED 25,000.
  2. Free Zone Company: Without office space and visa, the cost is approximately AED   11,900.

Choosing the right setup depends on your business needs and strategic goals, whether it’s leveraging the comprehensive infrastructure of DIFC or the broader market access provided by a mainland setup.

A Financial Consultancy Company presents numerous opportunities in the UAE, given its burgeoning market. The country’s stable government, effective governance, and robust banking system make it an ideal destination for businesses seeking to establish their headquarters.

Interested in obtaining a Financial Consultancy License in Dubai? Here’s how:

The process for acquiring a Financial Consultancy License in Dubai involves navigating two primary business jurisdictions: the mainland and Free Zone. Although the process is structured, there may be slight variations between these jurisdictions.

In general, here are the steps:

1. Secure approval for your trade name (choose from three options).

2. Complete the application form for company registration in either the Mainland or Free Zone.

3. Provide necessary supporting documents for shareholder(s), including photographs and passport copies.

4. Obtain pre-approvals from the Security Commodity Authority (SCA).

5. Submit all required documents, the application form, and applicable fees to the licensing authority for the Financial Consultancy License.

6. Acquire necessary company documents such as the Memorandum of Association, tenancy contract (for office space), and Shareholder Agreement.

7. Proceed with applying for UAE residence visas for investors and open a corporate bank account.

Looking for assistance with licensing and business setup? Consider these consulting firms:

  • Aurion Business Consultants
  • Kiltons Business Setup Services
  • Riz & Mona Consultancy
  • JUMEIRA Consultants
  • BSC
  • CommitBiz
  • NEX Consultants
  • Rakez
  • Shuraa
  • PRO Partner Group
  • Flying Colour

Our Recommendations

The consulting landscape is undergoing profound shifts, with consultants facing evolving client demands, technological advancements, and competition from both traditional firms and disruptive models, all compounded by the challenges of a global pandemic. Amidst this uncertainty, there’s a pressing need for consultants to introspect on their collaboration and approaches.

For decades, the consulting sector has been shaped by a few dominant players, particularly evident in regions like the UAE where the industry exhibits oligarchic traits. To thrive in this environment, firms must redefine industry norms on their own terms.

This entails adopting a fresh perspective on competition and business development, and fostering collaboration to tackle common industry obstacles. Consultants can educate clients on the value they bring, dispelling the notion that consulting services are optional. Addressing trust issues and engaging with government bodies to amend policies that favor larger firms can level the playing field.

Moreover, by forming an integrated consortium, consulting firms can create transparent channels for sharing knowledge and insights, enhancing business development efforts. Collaborative endeavors may even lead to the creation of new opportunities, shifting the focus from merely navigating disruptions to becoming agents of change.

In essence, rather than solely reacting to external disruptions, emerging consultants should strive to become disruptors themselves, catalyzing positive change within the industry.

Acknowledgments

We extend our sincere gratitude to numerous individuals whose invaluable insights have enriched our understanding of financial consultancy. While we cannot disclose their names to respect their privacy, we acknowledge the contributions of a prominent CFO from the aviation industry, directors in management consultancy firms, and professionals from leading advisory and audit firms who have assisted in identifying crucial needs gaps.

Additionally, we express our appreciation to Squarespace.com for providing access to their comprehensive report on small and medium-sized consultancy in the UAE. This report has been instrumental in shedding light on various facets of financial consultancy, drawing upon a combination of desk research and in-depth interviews conducted with industry professionals.

Post a comment

Your email address will not be published.

Related Posts