Understanding Saudization: Nitaqat Policy Explained for Businesses

Saudi Arabia's Saudization policy, formally known as the Nitaqat system, is a pivotal element of the Kingdom's Vision 2030. It mandates businesses to employ a minimum quota of Saudi nationals, tailored by sector and company size. While some view it as a regulatory challenge, forward-looking businesses recognise Saudization as a strategic tool for localisation, government alignment, and long-term market integration.

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As of 2025, the scope and stringency of the Saudization programme have expanded significantly. For executives planning market entry or evaluating current compliance, understanding these developments is essential.

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What is Saudization?

Launched by the Ministry of Human Resources and Social Development (MHRSD), Nitaqat categorises companies based on their percentage of Saudi employees. These categories—Platinum, High Green, Medium Green, Low Green, and Red—determine a company’s access to government services and its operational flexibility.

Key Determinants of Nitaqat Status:

• Workforce size
• Business sector
• Percentage of Saudi nationals employed
• Higher-tier companies benefit from smoother visa processes and eligibility for government tenders, while lower-tier companies face operational constraints.

Why It Matters for Your Business

For companies entering or operating in Saudi Arabia, Saudization shapes your strategy:

• Compliance Requirements: You’ll need to hit sector specific hiring targets. Falling short can lead to fines or losing out on government contracts.
• Financial Considerations: Saudi nationals often command higher salaries than expatriates, and training may be needed to align skills with your goals, impacting your budget.
• Access to government contracts: The Saudization certificate stands as a prerequisite for bidding on public sector projects. Companies failing to meet Saudisation requirements find themselves excluded from lucrative government procurement opportunities.‍
• Strategic Advantages: Hiring locals isn’t just about meeting rules. Their cultural insights and networks can sharpen your market edge and build stronger ties with regulators and clients.

2025 Updates: What Has Changed?

In 2025, Saudi authorities implemented notable changes across multiple industries, raising the stakes for foreign and domestic firms alike. Here are the key sector-specific developments:

Healthcare Sector

Effective April 17, 2025:

• Medical laboratories: Saudization increased to 70% (from 60%)
• Physiotherapy: 80% (up from 60%)
• Radiology: 65% (up from 60%)
• Therapeutic nutrition: 80% (up from 60%)

Consulting and Technical Professions

• Consulting roles: Must now meet a 40% Saudization requirement
• Cybersecurity, financial and business consulting: All fall under the new mandate

Retail and Sales

• Sales roles, procurement, and customer service positions: These roles are increasingly being reserved for Saudi nationals across industries

Technology and Telecommunications

While specific quota numbers remain pending, there is a policy shift encouraging more aggressive localisation within the ICT sector.

How to Navigate Saudisation Effectively

Adapting to Saudisation, including its 2025 policy updates, takes a clear plan. Here’s how to get it right:

• Understand Your Nitaqat Classification: Companies are ranked in tiers based on compliance. Platinum ranked entities receive privileged access to expedited government services and visa processing Keep tabs on your status.
• Leverage Local Expertise: Partnering with Saudi HR firms can streamline recruitment and training. A tech firm recently cut onboarding costs by 15% by working with a local agency to source skilled nationals.
• Invest in Development: Upskilling Saudi hires builds a capable, loyal team. Tailored training can turn potential gaps into long-term strengths.
• Stay Informed: Saudisation quotas and incentives shift—2025 updates may tighten requirements further. Check the Ministry of Human Resources and Social Development regularly to stay ahead.

Understanding the Nitaqat Classification System

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:

‍Platinum Zone

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.

High Green, Mid Green, and Low Green Zones

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.

Yellow and Red Zones

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.

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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.

Saudization Compliance Checklist for Businesses

For executives entering or operating in Saudi Arabia, the following are must-know compliance elements:

1. Role Nationalisation

Certain positions are exclusively reserved for Saudis. These include:

• HR managers
• Receptionists
• Customer service agents
• Sales representatives

2. Wage and Work Conditions

• Minimum salary: SAR 4,000 for an employee to be counted under the Nitaqat quota
• Employment type: Full-time
• Registration: Must be registered with GOSI (General Organisation for Social Insurance)

3. Penalties for Non-Compliance

• Red-zone companies: Barred from visa issuance, employee transfers, and contract bidding
• Fines and suspension: Financial penalties may be levied

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How to Strategically Align with Saudization

Step 1: Conduct an Internal Audit

• Assess your current workforce composition and Saudization level

Step 2: Identify Reserved Positions

• Reassign or hire Saudi talent where roles are nationalised

Step 3: Partner with Local Experts

• Use specialised advisory firms like Peninsula to navigate the multi-agency setup process and ensure compliance

Step 4: Implement Talent Development Plans

• Train Saudi employees in critical roles to ensure retention and performance

Frequently Asked Questions

What is Saudization?

Saudization refers to Saudi Arabia's national employment policy that requires businesses to hire a certain percentage of Saudi nationals.

How does the Nitaqat system classify companies?

Companies are classified into five colour-coded bands—Platinum, High Green, Medium Green, Low Green, and Red—based on their compliance with Saudization targets.

What happens if a company is in the Red Zone?

Red-zone companies face severe restrictions, including the inability to renew work permits, hire foreign workers, or compete for government contracts.

Are there wage requirements under Saudization?

Yes. Saudi employees must earn at least SAR 4,000 per month and be employed full-time to count towards quotas.

Is Saudization applicable to foreign companies?

Absolutely. All companies operating in Saudi Arabia, including foreign-owned entities, must comply with Saudization policies.

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The Bigger Picture

Saudization 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.

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About Alistair:

‍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.

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Schedule a free consultation with Alistair and the Peninsula team to understand which market entry strategy is best suited to your business setup in Saudi Arabia.

Email: Alistair@peninsulacs.com

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