The Saudi Arabian government is investing heavily in vocational and technical training and aims to create 100 technical colleges by 2020 under its reform program. From 2010 to 2014, government expenditure on technical and vocational training rose by 41.6% to USD 6.1 billion.

The government has set up the Technical & Vocational Training Corporation (TVTC) to concentrate on the development of vocational training in the Kingdom. The Colleges of Excellence have also been established to be the leading authority for applied training in the Kingdom. The key responsibilities of both organisations is to create a skilled labour force through collaborations with industries.

Colleges of Excellence has already collaborated with 12 global partners for setting up 27 such technical colleges, which will be managed by various international applied technical and educational institutions from the US, Canada, the UK, Germany, the Netherlands, Spain, Australia and New Zealand.

Such collaborations are an excellent opportunity for education providers who are looking to enter the market and have the potential to be extremely lucrative.

For example, in April 2014, it was reported that a number of UK education providers had won contracts worth roughly USD 1,341 million to provide 12 technical vocational colleges in the KSA. Once the colleges reach capacity, it is envisaged that they will train 24,000 students per year, including 14,000 women.

We have advised a number of educational institutions in connection with the collaborations. The terms of the collaboration agreement should be carefully considered, reviewed and negotiated to ensure that the educational institution is not subject to performance indicators and objectives which may in practice be difficult to meet.

Careful consideration will need to be given to staffing the new colleges. The Saudi government has put in place a number of helpful measures to assist with this issue. Ajeer enables the dependants of expatriate workers in the KSA to work in private schools, subject to certain conditions, without being sponsored by the school. This measure is very welcome and should significantly increase the number of females entering the market. Ajeer also enables institutions and colleges to effectively borrow employees from other entities for a period of up to three months without being required to sponsor the employee.

Educational institutions entering the market will also need to keep in mind the increasing focus on Saudization. Targets or requirements to employ Saudi nationals will likely apply both under the terms of the commercial agreement with Government agencies and also under the general employment law provisions. Under the Nitaqat system, companies are assessed based on the number of Saudi nationals it employs and will suffer disadvantages (including being unable to benefit from the Ajeer system) if it fails to recruit the required number of local nationals assigned to its business by the Ministry of Labour. The more compliant the company, the easier it will be to obtain new work visas (Iqamas) for expatriates. Staffing educational institutions with the sufficient number of Saudi nationals can be challenging, particularly given the need for segregation between males and females and the low numbers of trained and available national female teachers.