Gulf nations take AI governance in house

Governments in the Gulf are quietly rewriting the rules of how they operate, using artificial intelligence to replace expensive external advisers. For decades, ministries relied on consulting firms to handle complex strategy and policy work. Now, a shift is underway as nations like Saudi Arabia and the UAE build their own digital infrastructure to bring that expertise back in-house.

Scholars have long warned that this dependence on consultants weakens public institutions. In their 2023 book “The Big Con”, authors Mariana Mazzucato and Rosie Collington argue that outsourcing drains the state of its own problem-solving capacity. The United Kingdom serves as a stark example, where years of privatization eroded the government’s ability to think independently.

Artificial intelligence is changing the economics of this dynamic. Historically, organizations hired firms to access “tacit” knowledge—the intuition and judgment not found in manuals. AI systems, particularly large language models, can now synthesize and benchmark data in ways that previously required large teams of specialists. A study involving academics at Harvard, Wharton, Warwick, MIT and the Boston Consulting Group found that consultants using AI finished tasks significantly faster while producing higher-quality work.

Rebuilding State Capacity From Within

The Gulf offers a clear view of this transition. The regional consulting market was projected to exceed $8 billion in 2025. However, unlike Western nations, Gulf states did not outsource because they lacked capacity; they did it to move faster than their existing institutions allowed.

This approach differs from historical industrialization efforts, which usually required importing entire management teams to bridge the skills gap. By owning the technology stack, Gulf governments are essentially trying to skip a developmental step, moving straight from reliance on expatriate expertise to automated, home-grown analysis. It is a high-stakes gamble that assumes code can capture cultural context better than a foreign consultant can.

Saudi Arabia is leading the charge with Project Transcendence, a $100 billion initiative by its Public Investment Fund. At the Leap 2025 conference, the kingdom announced nearly $15 billion in AI investments. The country has also established Humain to develop Arabic-language models. The United Arab Emirates is building its own ecosystem around G42 and MGX, while Qatar launched its national AI company, Qai, alongside a $20 billion infrastructure partnership.

Policy Analysis Over Bureaucracy

This shift isn’t about how governments deliver public services or figuring out which citizens get benefits—tasks that really cannot be delegated to algorithms. Instead, it targets “policy analytical capacity”—the ability to define problems and evaluate solutions. AI tools allow public-sector experts to analyze vast amounts of data at a fraction of the cost of retaining a major consulting firm.

The Gulf’s AI build-up demonstrates how quickly such investments can reduce dependence on external advisers. While Gulf governments have begun to tighten consultancy spending, citing fiscal pressures, they are investing heavily in computing power and national data assets. This strategy allows them to bring capacity in-house through systems trained on national data and aligned with local priorities.

AI governance frameworks generally require human oversight to prevent errors. Algorithms can entrench outdated assumptions just as easily as they generate insights. The goal is augmentation rather than full automation.

The consulting industry faces a fundamental restructuring. If analytical work becomes automated, firms relying on that revenue stream will struggle. Successful firms will likely pivot toward areas requiring trust and deep institutional knowledge rather than data crunching. Since the same firms operate in London and New York, changes in the Gulf will likely ripple globally.

Ultimately, the region may prove less of an outlier and more of a preview. Governments are realizing they no longer need to buy what they can build themselves.