Rankings report: KSA
Vision 2030 eases skill shortage in buoyant KSA
The Kingdom of Saudi Arabia’s (KSA) efforts in moving away from a fossil fuel-based economy seem to be paying off with every sector reporting growth. Its Vision 2030 scheme, its framework for developing a new economy, seems to be working in terms of recruitment and the encouragement of SMEs. Che Golden reports
Demand for consulting in general is on the rise and with fresh regulation and government incentives, other sectors are beginning to blossom. Demand for accountancy services is expected to grow and there seems to be a real appetite amongst new graduates to start their own firms.
One of the primary objectives of Saudi Arabia’s Vision 2030 is to diversify the economy. With ambitious targets to move away from oil dependency, increase the size of the SME community and encourage more Saudis into the workplace, it is looking to turn around the oil tanker of its economy very quickly. In an effort to keep growth fuelled by skilled people, one of the core policies of Vision 2030 is ‘Saudisation’, which aims to increase the employment of Saudi nationals by incentivising employers to recruit Saudi employees.
According to a research paper published on Research Gate, Saudisation has shown more success in private sectors than the public sector. The findings of the research show that it has an impact on several aspects of recruitment and retention in the banking sector, in particular, as banks must provide specific training to Saudi recruits. This has benefitted the employees by increasing their skills and potential growth while reducing the employers’ reliance on expatriate workers, according to Dollah Alasire, tax advisor at Osama Elkhereiji & Partners Co., a PrimeGlobal member firm.
“Several programmes financed by the government have been launched for training and skills improvement,” said Alasire. “Tamheer, for instance, is a support programme designed for employers of the public sector to temporarily contract Saudis and train them at the cost of the Human Resources Development Fund (HRDF).”
One of the most successful areas of Vision 2030 is its focus on getting more Saudi women in the workforce. The nation aimed to have 30% of women included in the workforce by 2030. However, they have already surpassed that, currently standing at 33 per cent, almost 7 years ahead of schedule.
Alasire claims policies such as Saudisation result in skill improvement and high self-esteem. Combined with efforts to sustain growth and investment, facilitate job platforms and support recruitment processes, this can lead to more and better jobs, enhancing higher economic productivity.
Like many countries around the world, KSA is scrambling to find accountants to fill jobs. The recruitment shortage is being felt in other areas as well, according to the Cooper Fitch Salary Guide for the Kingdom of Saudi Arabia, which saw a significant jump in recruitment demand for all sectors in 2022.
“The policy to recruit KSA employees has a very encouraging effect,” said Nefal Barrak Beneyyah, managing partner, Kreston NBB Saudi. “The implications of this policy have not only enhanced the number of Saudi nationals in the professional market but also reduced the employer’s dependence on foreign labourers. The support package has significantly helped to ease the skills shortage in Saudi Arabia as well as promoting continuous professional education and training.”
“Sustained government investment, especially for startup companies, has also increased recruitment activities within project management as well as incorporation and development sectors,” said Alasire. “In fact, the growing non-oil sector has been experiencing healthy competition to participate in mega projects like NEOM, which require skilled individuals waiting to be discovered.”
Nefal Barrak Beneyyah, Managing partner, Kreston NBB Saudi
The KSA government is keen to increase the number of SMEs in the country. The SME sector has been a key part of the strategy to diversify the Kingdom's economy. The government sees SMEs as an important source for generating employment, creating economic opportunity for a low capital cost, while creating country-wide wealth and an equitable distribution of income.
According to the SME Digital Enabling Portal (ESCWA), Saudi Arabia has started initiatives to support the development of SMEs in the kingdom. These initiatives include reimbursement of taxes paid by SME businesses to the government and the Kafalah programme, which is designed to support SMEs by covering a percentage of failed investments. According to Global Business Outlook, Saudi Arabia had more than 890,000 SMEs by June of 2022, a nearly 25.6% increase from Q4 of 2021.
“By Q1 2022 SMEs accounted for more than 99% of all registered businesses in Saudi Arabia, which creates a significant market opportunity for local accounting firms to benefit from” said Alasire. “This to a great degree is due to serious and still changing financial regulations from authorities such as SOCPA and ZATCA to meet annual and periodic obligations. This stresses the demand for more CPAs and the expansion of established accounting firms.”
The government is also making it easier to set up a company with the introduction of the new Saudi Companies Law. In force as of January 2023, the new law reduces statutory requirements and procedures, while also introducing a new company form aimed at facilitating the establishment of startup and venture capital operations in the country. The main change is the introduction of a new form of company in KSA, a ‘Simplified Joint Stock Company’ (SJSC) to try and meet the growing demands of entrepreneurship and venture capital growth. An SJSC can be established by one or more people whose capital will be divided into tradable shares with a structure organised by the Articles of Association. There is no minimum capital requirement in an SJSC and shares can be issued in-kind. Shareholder decisions can be made by circulation as an alternative to a general assembly. Similar to Limited Liability Companies, the chairman and board of directors have the widest powers in the management of the company.
The accounting industry appears to have been not only healthy for the past three years, but also growing, as investments and startup companies rise. Startup companies alone have increased by 72% to USD 987 million in 2022, which requires more bookkeeping and tax services to be exploited. It seems that the demand for accounting services is expected to be sustained over the next few years, as entrepreneurs are motivated to develop and diversify their portfolio.
But according to Abdullah Bakodah, managing partner at Abdullah Omar Bakodah & Company, the situation is not completely positive. “The accounting industry in Saudi Arabia has been experiencing mixed conditions in terms of customer demand, fee pressure, and staff recruitment and retention,” he said. “Demand for accounting services in Saudi Arabia appears to be strong, with many businesses seeking professional accounting services to help them navigate complex financial regulations and reporting requirements. However, the accounting industry in Saudi Arabia has also faced fee pressure, with some clients seeking lower fees and more value for money. This has put pressure on accounting firms to be more efficient and cost-effective in their operations, while still maintaining high quality services.”
Abdullah Bakodah, managing partner, Abdullah Omar Bakodah & Company
In 2021, the Saudi Organisation for Chartered and Professional Accountants (SOCPA) introduced a new accountancy programme to encourage women to join and develop careers in the profession. Under the initiative, SOCPA will collaborate with Saudi universities to help more female accounting students benefit from its programmes. While other countries are reporting a drop in students applying for accountancy courses, KSA has seen real enthusiasm for the profession amongst graduates.
“We are seeing many college students choosing accounting to be a career and their ambitions do not stop at being employed,” said Alasire. “They have ambitions to establish their own business and compete against top accounting firms. Ultimately, this could result in a challenge to attract and retain exceptional talents with a high number of applicants. High inflation rates are also expected to affect the recruitment process for all industries.”
With growth being experienced across all sectors and business sizes, Alasire hopes this will push demand in accountancy. “We have seen a jump in growth in the automotive industry, retail, and online one-time and subscription services,” she said. “The food service industry is also high in demand and is being expanded after many shut-downs and lock-downs during the pandemic. Saudi Arabia has also been requiring more individuals in the tourism and hospitality sector, which indicates many opportunities for investments in this field. This, coupled with the goal of facilitating local and foreign investments in the Kingdom as well as supporting start-ups and small family businesses, is expected to create a quantum leap in operations and growth for local companies.”
Beneyyah has seen assurance, tax, and corporate finance as the specific service areas where demand has grown over the last 12 months, while Alasire expects small businesses to fully adopt e-invoicing systems and create more detectable transactions. “An increase in the industries of incorporation and advisory services is also expected as public and private projects are under construction and development,” she said.
Overall, Beneyyah claims the accounting industry in KSA is in a healthy condition, as there is a large client demand, the fees are reasonable and feasible, and staff recruitment and retention are good.
“Overall, the accounting industry is an important sector in Saudi Arabia,” said Bakodah. “According to a report by the Saudi Arabian General Investment Authority (SAGIA), the professional services sector, which includes accounting, consulting, and legal services, accounted for approximately 6% of the country's GDP in 2020. The report also noted that the professional services sector was one of the fastest-growing sectors in the country, with a growth rate of 7.5% in 2020. In line with the growth of the Saudi Economy and the expected growth in the next 12 months, the accounting industry will be in line with that growth. In my opinion, I believe that there will be great opportunities for accounting firms in the next 12 months.”