Saudi Arabia’s $1 trillion market is open for business, but success hinges on mastering one key policy: Saudisation. For international companies looking to tap into the Kingdom’s economic boom, understanding this requirement isn’t optional—it’s essential. This article explains what Saudisation means, its impact on your operations, and how to adapt effectively, ensuring your business thrives in this dynamic landscape.
Saudisation, officially the Saudi Nationalisation Scheme, and also referred to as Nitaqat, is a government initiative to boost employment of Saudi nationals in the private sector. It’s a cornerstone of Saudi Vision 2030, aimed at diversifying the economy beyond oil and tackling unemployment, currently around 11% as of late 2024. Under the Nitaqat system, businesses must meet specific hiring quotas for Saudi workers, tailored to industry and company size. Backed by Saudi labor laws, this policy prioritises local talent over expatriates.
For companies entering or operating in Saudi Arabia, Saudisation shapes your strategy:
Adapting to Saudisation, including its 2025 policy updates, takes a clear plan. Here’s how to get it right:
The Saudisation framework classifies private companies into six distinct zones based on their employment of Saudi nationals. This tiered structure directly impacts operational capabilities and market access:
The most prestigious classification, reserved for companies demonstrating exceptional commitment to Saudi employment. Platinum-classified entities receive privileged access to expedited government services and visa processing—creating significant operational advantages.
These classifications represent varying degrees of compliance, with companies meeting progressively lower Saudisation thresholds. While not enjoying the full benefits of Platinum status, Green Zone companies maintain good standing with Saudi authorities and face minimal operational restrictions.
Companies in these categories face substantial challenges due to insufficient Saudisation rates. Restrictions on visa issuance, renewal of work permits, and expansion capabilities create significant operational constraints. For business leaders planning company registration in Saudi Arabia, avoiding these classifications becomes a strategic imperative.
While the classification system primarily targets companies with more than ten employees, smaller entities must still employ at least one Saudi national—an important consideration during initial business setup in Saudi Arabia.
Determining your company's specific Saudisation requirements involves three primary factors:
This represents the proportion of Saudi nationals within your total workforce. The required percentage varies significantly based on company size and sector.
Total employee count determines which threshold applies to your organisation. For international companies entering the Saudi market, the second employee after the General Manager must be a Saudi national. Companies with fewer than five employees require one Saudi national, while larger organisations with over 100 employees must maintain at least 30% Saudisation.
Industry sector and specific business activities significantly impact Saudisation requirements. Certain sectors face higher thresholds due to strategic national priorities.
The calculation methodology incorporates several important nuances. Saudi employees earning less than SAR 4,000 monthly count as 0.5 persons toward the quota, while employing individuals with disabilities provides a 4:1 ratio benefit. All Gulf Cooperation Council nationals qualify toward Saudisation requirements, providing additional flexibility for regional recruitment strategies.
Saudisation reflects Saudi Arabia’s commitment to empowering its workforce and securing a sustainable future. For your business, it’s a balancing act: higher costs and hiring adjustments on one side, access to a booming market on the other. With giga-projects like NEOM and Qiddiya driving billions in investment, getting Saudisation right isn’t just compliance—it’s your ticket to compete. Need tailored advice on the latest Saudisation policy for 2025 or your industry? Reach out—I’m here to help.
Alistair Paine brings 15 years of dedicated experience in Saudi market entry, guiding Fortune 500 companies and innovative scale-ups through successful establishment in the Kingdom. His expertise in Saudi company formation, licensing and market entry strategy, positions him as a leading authority and consultant in international business expansion to Saudi Arabia.
Schedule a free consultation with Alistair and the Peninsula team to understand which Saudi market entry strategy is best suited to your business.
Email: Alistair@peninsulacs.com
