Saudization and SMEs

Saudization is an essential part of doing business in Saudi Arabia and recent changes have made it easier for small and medium sized enterprises (SMEs) to implement. Saudization increases the participation of Saudi nationals in the workforce, specifically in the private sector. To accomplish this, the Saudi government developed the Nitaqat system which indicates the number of Saudi employees required per company depending on the industry and size. This comes with different challenges for SMEs compared to multinationals.

 Although SMEs require less Saudis to reach the requirements, making it easier for SMEs to remain compliant; with smaller HR departments, SMEs often require additional HR support throughout the Saudization process and a lack of resources, budget or expertise may make it harder for them to find the suitable candidate. Additionally, SMEs have to compete with multinationals for the best candidates. With smaller budgets, the salaries and benefits they have to offer are most likely less than what a multinational can offer, and may cause candidates to choose larger and more well known companies. 

Acknowledging the challenges that companies face implementing Saudization, the government revised the regulations to have immediate updates to companies’ Nitaqat ratings when an employee is hired or resigns; this has made it easier for SMEs to stay compliant. Despite these changes, SMEs still need a way to implement Saudization in a practical way. 

To overcome the challenges associated with Saudization, SMEs need to have a clear HR strategy that specifies the search, recruitment, hiring and onboarding process. With less access to resources, SMEs may be required to outsource a part or the entire hiring process. Outsourcing your recruitment process may be the most effective and efficient way to find a suitable candidate for your company’s requirement.

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SMEs need clear action steps to define how they will implement Saudization and remain compliant. Below are steps SMEs can take to find the suitable employee and get their Nitaqat rating in the mid green and above levels.

  1. SMEs need to develop a strategy that addresses how they will handle the recruitment, hiring and onboarding process. It will also need to cover how to retain employees and how SMEs will keep employees engaged, focused and involved in the workplace; this will reduce the costly and resource-heavy process of rehiring.
  2. Outsourcing your Saudization needs is another option for SMEs to access the expertise and experience of a recruiter while focusing on their core competencies. A professional recruiter will have access to a larger pool of candidates and give you the expertise to achieve your strategic hiring objectives 
  3. If SMEs would like to keep the recruitment process in-house, they can sign up for a site such as TAQAT, the government’s portal to help companies connect with Saudi nationals looking for employment. The portal provides companies with the tools and support to find candidates based on their interests, qualifications and experience; and it offers training through their Doroob portal.

Compliance is essential for success in Saudi Arabia and there are helpful incentives that come along with compliance as the government seeks to reward companies that reach the platinum level in Nitaqat. Although Saudization is a challenge for many companies, with a suitable and strategic approach, SMEs can implement it in a beneficial way. However SMEs choose to tackle Saudization, inhouse or outsourced, there are many approaches to support them through this process. 

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