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Middle East Market Report 2011 - analysis by sector

Here is a review of the market dynamics by sector:

Banking and Financial Services

The credit crisis and resulting recession impacted economies and the financial sector throughout the world. Within many regions low interest rates and looser credit conditions allowed the banking and wider financial services industry to rebound in 2010 and make a welcome return to profitability.

All the GCC countries were similarly affected. Whilst many banks in the region have historically been conservatively managed, they could not escape the global downturn which was exacerbated by major exposures to local groups such as Dubai World and Saad. At the start of 2010 the increase in demand for internal auditors that became evident in other regions appeared to be replicated in the GCC. Unfortunately this seemingly petered out and the recovery during 2010 proved to be sluggish.

At the start of 2011 provisioning for banks in the region appeared to have peaked. With strong capitalisation and increasing profitability the signs of a steady recovery are finally becoming apparent. Recruitment within the sector is now reflecting this.

The majority of internal audit recruitment is currently on a replacement basis and movement within the market still remains limited. However, as discussed in our 2010 Interim Market Report, one outcome of the global financial crisis has been a heightened awareness of the role of corporate governance. For example, there has been significant recruitment in risk management as a result of upskilling in technical areas and the active development of risk functions particularly in credit and market risk. Whilst we may have expected similar developments in internal auditing, it has more generally lagged developments in risk management.

There are exceptions with some banks strengthening their audit teams by recruiting internal auditors with experience of specialist areas such as treasury, credit and wealth management. We have also seen a number of Head of Audit roles recruited with the specific remit to strengthen the function. However, there has been almost no demand in certain locations such as Dubai and in disciplines such as technology audit. This appears to be significantly under-represented compared to banking markets in other regions of the world.

As recruitment budgets become available and departments begin to strengthen, we expect to see an improvement in the banking and financial services recruitment market. There is no doubt that many of the opportunities will be for industry experienced internal auditors with a good understanding of risk management.

Another area that may see recruitment activity is in Islamic Banking. This is a growing global business, with a significant number of Islamic Finance Houses with their assets based in the GCC countries. Whilst the Qatar Central Bank has jolted the local market with their recent plans to separate conventional banks from their Islamic banking activities, elsewhere this is not an issue and significant growth is forecast. We can expect internal auditors to be recruited into these business areas.

Property, Construction and Real Estate

The financial crisis caused residential property in some areas, most notably Dubai, to fall by up to 60% and resulted in many construction projects being halted. In 2010 a turnaround started. Lower construction costs, declining interest rates, government spending, and legal obligations to fulfil contracts have all assisted in the recovery. Government infrastructure initiatives have continued with the most significant development being the award of the World Cup in 2022 to Qatar. This will result in the issue of $3billion worth of contracts for roads and infrastructure during 2011 and into 2012.

Although the market is now recovering, the demand for internal auditors over the last year has been relatively subdued. Despite construction projects that are some of the most advanced in the world, many internal audit divisions remained old fashioned. To date demand has been at more senior levels or for specialists. These include experienced construction auditors and those from the Big 4 or in-house auditors with surveying or engineering backgrounds.

Internal auditors seeking to move within this sector are treating potential employers more cautiously. Lessons were learned from companies who failed to deliver on their commitments during the recession. Internal auditors looking to join companies in this sector now look to the financial strength and commercial record of their prospective employer.


Throughout 2010 the oil and gas industry offered stable employment and it continues to be a significant employer of internal auditors across the GCC. It is a global hub not only for state owned energy groups but also a wide range of multinational companies and related service industries. With oil and gas prices and production both rising the industry is likely to remain an active participant in the internal audit recruitment market. Currently the main concern is the potential effects of civil unrest across the region. However, with the majority of auditors based in Saudi Arabia, Qatar and the UAE, we would expect to see continued demand.

As always in this sector, previous relevant experience is desirable. Whilst there is an established local supply of sector experienced internal auditors, there are always opportunities for candidates from overseas with oil and gas industry audit experience.

Public Sector

Government departments continue to employ the highest number of internal auditors across the GCC. Excellent benefits and relatively better working conditions are two key attractions to working in the sector. Although many internal audit departments are less sophisticated than those in the private sector, continued investment and initiatives to promote greater transparency continued throughout 2010. One such initiative involved the Big 4 being partnered with for the training and development of local nationals. With many government internal audit departments still being established a new wave of internal auditors should emerge with an understanding of modern audit methodologies that will add significant value to government audit functions.

Invariably recruitment is driven by a requirement to speak Arabic. The exception being at a Head of Audit level where expertise in setting up a sophisticated audit function is an over-riding requirement. The remuneration and benefits packages available mean government departments can compete for candidates internationally and start-up roles are proving particularly attractive.

Big 4 and Other External Audit Providers

Whilst the recession led to cuts in the use of external audit providers during 2009, as 2010 progressed budgets for their employment became more readily available. In 2011 with the economic recovery gathering pace, demand for audit and risk services is now growing. Using external providers such as the Big 4 is an option for companies who cannot commit to using permanent resources.

The Big 4 began to recruit again in 2010 and Arabic speaking internal auditors are now being sought across Saudi Arabia, Kuwait and Abu Dhabi. Previous international consulting experience is usually desirable and demand for fraud and forensic investigation experience is increasing. Whilst candidates were readily available during 2010, recruitment and retention is likely to be more problematic for the Big 4 and other external audit providers during 2011. As demand for internal auditors picks up more generally, the Big 4 will be viewed as a prime source of candidates for in-house audit teams. In-house salaries are also likely to increase which will put the Big 4 at a disadvantage.

Commerce & Industry

Across the GCC governments are embarked on programs to diversify their economies away from energy related industries and develop a wider commercial and industrial base. Within the GCC manufacturing, transport, aerospace, technology and other industries are developing. These industries, often the result of foreign investment, are complementing the indigenous family owned conglomerates. The sector has enjoyed mixed fortunes with many of the newer sectors such as airlines and metal production becoming successful. Companies in these sectors have been developing internal audit functions and providing demand for internal auditors across the region.

In contrast many of the family owned conglomerates have faced challenges as a result of the financial crisis. Corporate governance within these groups is under developed and resourced. Whilst they are moving towards more credible levels of corporate governance, opportunities for internal auditors outside of the largest groups remain limited.

As the economies of GCC countries continue to diversify and develop and with international pressure to improve control and transparency, opportunities for internal auditors will increase.

Currently many of the requirements are for internal auditors with specialist technical or industry related skills. Given the limited local pool of audit resources in this sector, employers often need to look overseas to fulfil these requirements.

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