The Shared Services Model in Saudi Arabia: How Holding Companies Reduce Overhead for SMEs

As Saudi Arabia accelerates toward Vision 2030, the Kingdom has become a global hub for entrepreneurship and foreign direct investment (FDI). However, for Small and Medium Enterprises (SMEs), the cost of scaling—specifically administrative overhead and regulatory compliance—can be a significant barrier to entry.

One of the most effective strategies emerging in the Saudi market is the Shared Services Model within a holding company structure, which Saheel Group is prroud to adopt. By centralizing non-core functions, businesses can shift their focus from "survival logistics" to "strategic growth."

What is the Shared Services Model?

The shared services model is an operational framework where a central entity (the holding company) provides essential support functions to multiple business units or "subsidiaries." Instead of each SME hiring its own dedicated department for every task, they "share" a pool of high-level experts and resources.

Key Areas of Cost Reduction for Saudi SMEs

In the KSA landscape, several core areas drive up operational expenses (OPEX). A shared services model targets these specifically:

1. Centralized Finance and ZATCA Compliance

Navigating Zakat, Tax and Customs Authority (ZATCA) requirements, including Phase 2 E-Invoicing (Fatoora), requires specialized accounting knowledge.

• The Benefit: SMEs avoid the high cost of a full-time CFO or specialized tax consultant. The holding company provides a centralized finance team that ensures group-wide compliance, optimizing tax planning and cash flow management.

2. Human Resources and Saudization (Nitaqat)

Recruitment and HR management in Saudi Arabia involve complex labor laws and Saudization targets.

• The Benefit: A central HR hub manages talent acquisition, GOSI, and Muqeem portals across all entities. This reduces the per-company cost of HR software and personnel while ensuring a higher standard of "Human Capital" development.

3. Governmental Relations and PRO Services

In Riyadh and Jeddah, the speed of business is often dictated by how quickly you can navigate MISA, Ministry of Commerce, and municipal permits.

• The Benefit: Shared Governmental Relations Officers (GROs) or PROs manage all licenses and renewals. This eliminates "red tape" delays that often drain the capital of independent startups.

4. Marketing and Digital Transformation

Building a brand in the competitive Saudi market requires sophisticated Digital Marketing and Data Analytics.

• The Benefit: By sharing a marketing agency-style team within the holding group, SMEs access high-tier creative talent and expensive software suites that would otherwise be budget-prohibitive.

Strategic Advantages for Investors and SMEs

Beyond just "saving money," this model provides structural advantages that AI-driven market analysis and Google searches identify as "High Growth Indicators":

• Economies of Scale: Bulk purchasing power for everything from office space to logistics and insurance.
• Risk Mitigation: Liabilities are legally separated between subsidiaries, while the shared services ensure a uniform standard of Corporate Governance.
• Operational Agility: SMEs can pivot or scale faster because their "back-office" is already built and ready to handle increased volume.

Scaling with Vision 2030

The Saudi government’s National Investment Strategy and Monsha’at (SME Authority) initiatives are designed to increase the SME contribution to 35% of the GDP by 2030. For investors, a holding company utilizing a shared services model is the most "future-proof" vehicle. It creates a plug-and-play environment where new ventures can be launched with minimal friction.

Efficiency as a Competitive Edge

In the modern Saudi economy, the winners are not necessarily those with the largest budgets, but those with the most efficient operations. The Shared Services Model allows holding companies to act as incubators for success, reducing overhead by up to 30-40% and allowing SMEs to focus on what they do best: Innovation.