The Kingdom of Saudi Arabia (KSA) is a huge player on the global economic stage. After a quick post-pandemic recovery and newly implemented 2022 pro-business reforms, Saudi Arabia has become one of the world’s fastest-growing economies.
With great economic growth comes potential for profit, especially for multinational companies. However, international companies must first learn how to navigate regulations and recruitment policies around Saudization.
Why more companies are operating in Saudi Arabia
First, let's uncover what makes Saudi Arabia such a profit-enabling economy:
Today, KSA is considered one of the top 20 economies in the world, outperforming the Asian giants of China, India, Indonesia, and South Korea, as well as the G7 and other major emerging countries.
The country’s sustained growth and vast resources, combined with its strategic location as a worldwide trade route axis between Asia, Europe, and Africa, has made it a desirable destination for business expansion.
Second, KSA has recently announced that it will allow foreign companies to operate in Saudi Arabia without having a headquarters in the country. A decision following the 2021 requirement for foreign companies to set up a headquarters in the country or lose government contracts.
It is no wonder that many of the world’s most successful international businesses have set offices in the Kingdom of the “Green Falcons”; among them include top multinational tech, finance, and consulting firms.
Global Companies Doing Business in the KSA and Hiring Saudi Talent:
- 3M
- First Union Bank
- Bechtel
- EY
- Oracle
- L’Oreal
- Nestle
- IBM
- Amazon
- Deloitte & Touche
- Premier Technology
- Huawei
- Samsung Electronics
- Rolls-Royce
- Hewlett-Packard
- JP Morgan Chase
- The SABRE Group
- Bank of America
- Pfizer International
What to know about hiring in Saudi Arabia
Like in neighboring Gulf countries, with their shared traits of vast wealth and skyrocketing economies, KSA has developed regulations to support their nationals and economic growth.
One such policy is Saudization, or Saudi Nationalization, a requirement for companies operating in Saudi Arabia to fulfill a quota of hiring Saudi Nationals. When operating in the Kingdom, recruiters must fill a certain number of roles with Saudi Nationals so as not to depend exclusively on the community of expats.
What is Saudization?
Saudization (Nitaqat) is a policy implemented by the Ministry of Labor whereby companies doing business within Saudi borders are required to hire Saudi nationals on a quota basis.
This policy has been ongoing since 1985; however, it has been recently updated by the Saudi government to better align with their Vision 2030 program goals.
A Saudization talent-hiring quota means that all companies must have a percentage of their workforce composed of Saudi nationals.
The Ministry of Human Resources and Social Development (MOHRSD) have selected key professionals from a variety of industries and released effective target dates and rates of employment between 25% and 40% that must be met by March 2024. The minimum quotas companies must comply with vary by industry and are updated regularly.
Not meeting the demanded quotas will result in the company’s inability to renew its work license (permit to do business in the KSA) or access government-provided benefits.
The Nitaqat System determines which benefits or limitations your company has.
What is the Nitaqat System?
The Nitaqat System is a categorization system used to determine a company’s Saudization minimum rates and eligibility for benefits according to your company’s Nitaqat Status.
Your company’s Nitaqat Status is decided based on the following three factors:
- The current Saudization percentage
- Your company’s size (total employees)
- Your company’s classification (activity/industry)
Finally, according to your business’ level of Saudization compliance, your company will put it into one of five color-coded categories from the Nitaqat Range.
Having a good level of Saudization compliance will make your company potentially eligible for the following benefits:
- Expedited visa processing and lower processing fees
- The ability to renew Iqamas (visas for non-Saudi employees) easily
- Eligibility to switch your employee’s profession
- Ability to hire new employees from red (lowest) category companies
All Saudi Arabian companies should meet their corresponding Saudization quotas and aspire to be in the Platinum (highest) category/range.
Limited Saudi Nationals Talent Pool
Contrary to the expectation that the push for increased Saudization and the addition of 1.2 million private-sector jobs in 2022 would make the percentage of Saudi nationals in the country’s candidate pool high, this is not the case.
Two main factors make the Saudi national count in the talent pool limited. On the one hand, many Saudis prefer to work in the public sector, as they perceive higher salaries and more stable jobs there.
In addition, the second limiting factor is the government-mandated requirement to hire Saudi nationals to be able to do business in the first place. This drives up demand as it reduces the number of job-searching or unemployed Saudis in the country.
Building your Saudi national talent pipeline with Localized
Saudi Arabia is a one-of-a-kind business destination. The benefits, potential market share, and revenue-growth potential of doing business in the KSA are clear: a stable political landscape, an outperforming emerging economy, and its strategic trade location.
But, with a required yet limited Saudi national talent pool, doing business in this fast-growing economy can take time and effort.
If you are ready to expand your business to Saudi Arabia, Localized is here to give you a helping hand. Ensuring your Saudi talent pipeline is full, and your company enjoys the benefits of being a Nitaqat Platinum status organization.
Recruiting on Localized allows employers to connect with, source, and hire top-quality Saudi Nationals through a single source.
Request a Demo today and learn why Fortune 500 companies trust Localized to help them find talent in KSA and across EMEA.