Does Outsourcing Exempt You From Saudization?
No MHRSD procedural guide we reviewed says outsourcing or manpower supply exempts an employer from Saudization. Rates are measured on the employees of an entity, and MHRSD's guide covers duties assigned to non-Saudis directly or indirectly under another job title. The guides do not say how third-party staff are counted for the client. MHRSD has not published that detail, so confirm your case before relying on outsourcing.
Does outsourcing exempt you from Saudization? On the evidence of MHRSD's published guides, no exemption exists, and the guides do not tell you how staff supplied by a third party are counted for the client. This page sets out what the guides say, what they leave open, and the questions to settle before restructuring any role.
What do MHRSD's guides say about outsourced workers?
They are silent on third-party staff. We reviewed MHRSD's project management procedural guide, its procurement guide and its 2026 Developed Nitaqat guide. None describes how outsourced, contractor or labor-supply workers are counted for the client establishment.
What the guides do say is narrower, and it matters.
| Point in the guides | What it says | What it does not say |
|---|---|---|
| Unit of measurement | The rate applies to employees working in the targeted professions at entity level | Whether workers on another company's payroll are included |
| Entity definition | All branches in the same economic activity owned by a single establishment | Whether service providers form part of the entity |
| Duties and titles | The decision applies to the listed titles and to actual duties | How duties delivered by a provider are treated |
| Enforcement language | Penalties apply if an establishment fails the rate, or assigns covered duties to a non-Saudi employee directly or indirectly under another job title | Whether "indirectly" reaches outsourcing |
| Nitaqat | Band assessed at entity level | How labor-supply arrangements are treated |
Does outsourcing or manpower supply exempt an employer?
MHRSD has published no such exemption in the guides we reviewed. Absence of an exemption is not the same as a ruling that outsourcing is caught. The accurate position is that the question is not answered in the public guides.
Two features of the rules make reliance on outsourcing a risk for the client.
- The rule follows duties, not only titles. MHRSD's guide says decisions apply to listed occupations and to the employee's actual duties.
- The enforcement language includes indirect assignment. The guide refers to assigning covered duties to a non-Saudi employee "directly or indirectly" under any other job title.
Neither phrase is explained for third-party arrangements. Until MHRSD says more, restructuring a Saudized role through a provider is a position you would be taking without published support.
What MHRSD says
- Rates apply to employees in the targeted professions, calculated at entity level.
- Decisions apply to listed occupational titles and to the employee's actual duties.
- Assigning covered duties to a non-Saudi employee, directly or indirectly, under another job title falls under the penalty schedules.
- Recruitment or outsourcing activity without a license is a category in the February 2026 penalty schedule.
Our analysis
- Staff on a provider's payroll are, on the wording of the guides, that provider's employees, not yours. That is our reading, not an MHRSD statement.
- If your own managers direct that work every day, the "actual duties" language may be relevant to you. MHRSD has not said so either way.
- The safe course is to ask MHRSD or Qiwa support, in writing, before you outsource a role that sits on a targeted list.
Who is measured when a provider supplies staff?
On the wording of the guides, each establishment is measured on the employees it employs. The worker is recorded on the payroll and contract of their own employer. That has three consequences.
| Party | Likely position | Check |
|---|---|---|
| Client (you) | Provider's staff are not your employees for the headcount, unless MHRSD says otherwise | Ask MHRSD or Qiwa support how your arrangement is classified |
| Provider | Its own employees in targeted professions count toward its threshold and rate | Provider's own compliance with the rate and with licensing |
| Worker | Registered under the provider's contract and occupation | Occupation matches duties; see job title mapping |
This table is our analysis of the guides and is not an MHRSD ruling. The counting rules page explains who counts for Nitaqat.
Do providers need a license?
Yes, the penalty framework treats unlicensed activity as a violation. The Saudi Press Agency reported that the February 2026 revision of the schedule under Decision 112377 includes a category for recruitment or outsourcing activity practiced without a license. Check your provider's license before you sign. See Saudization penalties and inspections for the framework.
Which situations are different from outsourcing?
Three common arrangements should not be confused with it.
- A genuine service contract. You buy a result, such as a cleaning service, and the provider manages its own staff. Duties of a covered profession are not involved.
- Supplied staff doing a targeted role. The provider supplies a worker whose duties match a targeted occupation, such as a procurement specialist. This is the case the guides do not answer.
- Secondment from a group company. A person remains employed by another entity but works for you. Entity-level counting depends on who the registered employer is. The guides do not address it.
What does a worked example look like?
An entity has four people registered in the three project management occupations: three Saudi and one non-Saudi. Four at 70% is 2.8, which rounds to three Saudis, so it is compliant when the rule starts on 14 February 2027.
Now suppose it wants to add two project managers. If it hires them as employees, headcount becomes six and the required Saudis are four (4.2 rounds to 4). It would need one more Saudi among the two hires. If it brings in two non-Saudi project managers through a provider instead, the guides do not state whether they enter the entity's headcount. That uncertainty is the risk. A hire that follows the rounding rule is documented; a provider arrangement is not covered by any published MHRSD statement.
For the arithmetic on other team sizes, see the project management Saudization page and the Saudization calendar for dates.
What should HR do before outsourcing a covered role?
- List the occupations in each targeted profession rule you are close to, and the roles you are thinking of outsourcing.
- Check whether the provider has a valid license and what its staff are registered as.
- Write down who directs the work, who sets the schedule and who signs the output.
- Ask MHRSD or Qiwa support for a written answer on how the arrangement is treated for your entity.
- Calculate your own rate on the assumption that the provider's staff do not count for you. Run the readiness checklist on that basis.
- Keep the contract and the reply together in your compliance file.
Does a good Nitaqat band change the answer?
No. Profession rules are separate from Nitaqat. The employer guide explains why a good band does not exempt a profession rule, and why an outsourcing structure does not resolve either test on its own.
This page reports what MHRSD has and has not published. It is not legal advice for your entity.
Frequently asked questions
01Do outsourced workers count toward my Saudization percentage?
MHRSD's guides say rates are calculated on employees at entity level. They do not state how workers supplied by a third party are counted for the client. Workers are normally recorded under their own employer. Confirm with MHRSD or Qiwa support before assuming they count for you.
02Can I outsource a Saudized role to avoid the rate?
MHRSD has not published an outsourcing exemption in the guides we reviewed. Its project management guide treats assigning covered duties to a non-Saudi employee, directly or indirectly, under another title as a violation by the establishment. Whether that reaches third-party staff is not stated.
03Does the outsourcing company have to meet Saudization rules?
Each establishment is measured on its own employees, so a provider that employs workers in a targeted profession faces the rule for those employees if it meets the threshold. A provider also needs a license. MHRSD's February 2026 penalty revision includes a category for outsourcing without a license.
04Does hiring through a manpower agency change my Nitaqat band?
MHRSD's 2026 Nitaqat guide does not address third-party labor supply in the text we reviewed. Nitaqat counts employees of the entity. Staff on another company's payroll are normally part of that company's count. Ask Qiwa support how your arrangement is treated.
05What documents should I keep if I use outsourced staff?
Keep the service contract, the provider's license, a list of provider staff and their registered occupations, and a note of who directs their daily work. These help show how each role is structured if MHRSD asks about it.
Sources
- MHRSD: Procedural Guide on the Decision to Localize Project Management Professions (PDF). Ministry of Human Resources and Social Development, 2026-09.
- MHRSD: Developed Nitaqat Program Procedural Guide, 2026 edition (Arabic). Ministry of Human Resources and Social Development, 2026-01.
- MHRSD: Procedural Guide on the Decision to Localize Procurement Professions. Ministry of Human Resources and Social Development.
- Saudi Press Agency: Minister of Human Resources amends the schedule of violations and penalties for the Labor Law. Saudi Press Agency.
This page explains Saudi workforce localization rules for general information. It is not legal advice. Rules change, so confirm against the official MHRSD decision linked above and take advice from a qualified Saudi legal adviser before acting. StrongYes is an independent publication and is not affiliated with MHRSD, Qiwa or any Saudi government body. Full disclaimer.