Saudi labor localization will take ‘generation or two': Armada CEO

Saudi Arabia's push to nationalize its workforce will take "a generation or two" despite rapid progress under Vision 2030, according to Olivier Badard, CEO of Riyadh-based Armada Holding. He said that training Saudi talent and transferring expertise remain among the kingdom's biggest long-term challenges.

The challenge is particularly significant given Saudi Arabia's youthful demographics. Around 70% of Saudi Arabia's population is 35 years old or younger, according to the kingdom’s General Authority for Statistics. The national median age is roughly 23.5 years, and the country has a high adult literacy rate of around 98%, underscoring a young, broadly educated labor pool that policymakers are seeking to channel into the private sector.

Developing Saudi talent

“It's an opportunity, because Saudi Arabia has more than 20 million nationals. But developing this talent and making sure that they are properly trained and educated … probably [for] Vision 2030, is the biggest challenge going forward,” Badard told Al-Monitor.

Under Vision 2030, Saudi Arabia seeks to reduce its reliance on foreign labor through localization quotas, knowledge-transfer requirements and higher female workforce participation.

Founded in 1999, Armada Holding operates across contracting, trading and services businesses in Saudi Arabia, including infrastructure, technology and environmental projects.

Badard, a French national, said Saudi Arabia’s labor market has undergone rapid change in recent years, with increasing emphasis on localization and private sector participation.

“Up until 15 to 20 years ago, most of the Saudi nationals were working for the government — 80% of them. Now, there's clearly a need, a push, a drive, a desire, an invitation to this young population to work in the private sector,” he said.

“It's a matter of phasing in and phasing out — so phasing in national talent [and] phasing out international talent when the transfer of knowledge happens. But it will take a generation or two, probably,” Badard added. 

According to Badard, around 30% of Armada's staff are Saudi nationals. Saudi Arabia enforces localization through its Nitaqat system, which classifies companies according to the percentage of Saudi nationals they employ relative to the company size. Companies that fail to meet required localization levels can face restrictions on visas and other government services. Some sectors, such as retail and services, have higher nationalization requirements than others.

For Vision 2030, the government wants to reduce the Saudi unemployment rate to 7%. However, in the final quarter of 2025, this rate was already at 7.2%, indicating that the target will be reached early.

Growth sectors

Badard said tourism could become one of the largest sources of private-sector job creation over the next five years, supported by a pipeline of major events including Expo 2030 Riyadh and the 2034 FIFA World Cup. Tourism already contributes roughly 5% of Saudi GDP and is expected to rise significantly under Vision 2030.

Badard also highlighted growing opportunities in technology, AI and defense, where localization efforts are accelerating alongside sovereign capability-building initiatives linked to the Public Investment Fund.

Referring to the US-Israel-Iran war and broader regional tensions, Badard argued that “the war that happened over the last few months just proves that it's very important to have your own intellectual property and to develop sovereign capabilities in this field of defense and security."

Localization drive

The kingdom’s economic transformation is creating clear winners and losers, Badard said, as competition intensifies between established private firms and state-backed groups linked to the PIF.

“With Saudi companies, I think there's a true push to see the private sector take ownership of some of the initiatives that are being launched. Clearly, those that can secure the best partners, initially international partners, to deliver whatever capability, service, product or solution that is being looked at will have an edge,” he added.

He said that firms able to localize knowledge, build Saudi talent pipelines and embed technology transfer are best positioned to succeed in the long term.

Badard pointed to the defense sector as an early example of this model, where localization requirements and procurement rules overseen by the industry regulator are shaping supplier behavior. He said this approach is increasingly viewed as a template for other sectors in Saudi Arabia.

“It's about bringing the best capabilities from international partners into the country and making sure that those capabilities, over time, are managed and developed down the road by Saudi talent. I think if you tick these two boxes as a private sector company, you probably have more chances of succeeding in the long term than if you don't,” he added.