Members Op-Ed: From SMEs to Large Consultancy Firms… Checkmate

Kareem Farid, Managing Director, Leap Comms.

To this day, most large consultancies in the region continue to struggle with digital transformation and digital integration in traditional communications. This outdated conversation tells us a lot about how the Covid-19 crisis continues to impact the industry.

As the pandemic continues to grow, so does the disruption to the global economy, healthcare system, businesses and our daily lives continues. We’ve observed the guidelines set by experts and governments, heard people’s stories and it’s quite evident that this crisis will change the way we live and operate. However, it doesn’t just stop there.

• Industry salaries and benefits will be revised, especially the transportation allowance that takes up to 30% of most employment contracts.
• Traditional old school agencies will fade out and digital natives will take over leadership of the industry in the region.
• Governments will support SMEs get through the crisis.
• SME market shares will increase.
• The market will go into equilibrium by eliminating mediocre talents.
• Medium to large agencies will cut cost by 20-40% at least

The ideal global scenario does look grim, but there’s still hope. Based on how SMEs are quick to adapt as they grow, they have the opportunity to shine and expand their services and solutions to sectors that were dominated by larger organizations. Smaller teams have more flexibility than ones that are much larger. This period calls for working in a smarter fashion rather than just assuming it’s still business as usual.

But how does this impact the MENA region?

When the Saudi Arabia announced Vision 2030, UAE based agencies and consultancies competed to initiate operations in the Kingdom. Daily and weekly trips to Riyadh and Jeddah transporting consultants to and from Dubai transformed Sunday morning and Thursday night flights into what seemed like rush-hour on the public transport system in a densely populated city.

Firms wanted to penetrate a crude market, in which practices and clients were still brand new. This led to:

• High contract values and high profit margins
• Firms offered lucrative deals to people willing to relocate to Saudi
• Increase in non-essential and immediate hiring of unskilled workforce
• The market was inflated with high salaries that led to high operational costs and unrealistic pricing models caused by duplication of roles

In 2019, the Saudi market began to mature, and competition sharpened between UAE based firms. But the world’s economy had to go down maybe to teach us some valuable lessons. The Covid-19 pandemic led to an increase in strict precautionary measures and working from home implemented leading to a halt in global travel.

With the looming economic depression, retaining clients and the workforce is a priority along with developing long term solutions to manage the operations costs and overheads. Temporary pay cuts are the new reality as organizations try to navigate an unprecedented crisis. While large organizations cut costs, SMEs have the ability to survive without cost reductions as they have low operational costs and efficient work models, minimum overheads and realistic profit margins with overall affordable prices.

The ball is in the court of large agencies to be transparent, strategic and empathatic in dealing with their high operational cost struggle. Covid-19 has increased the pace of change, but it shouldn’t be blamed for everything.

Now, it’s your turn. what’s your next move?