30 Apr Trends in the Professional Services Industry
Disruptions and major transformation are on the agenda
Anyone involved in the professional services industry already knows that their companies are now facing a host of challenges, and that their sector is undergoing a major transformation which is disrupting the traditional way of working.
This industry will look significantly different ten years from now. The very essence of professional services will be altered as client and employee expectations are evolving, the development of technology is accelerating and other external factors are coming into play.
If you search the web, you will discover a large number of studies describing the key issues that are challenging the leaders in this space. Let’s take a closer look at the key issues and challenges in an industry which, let’s not forget, plays a major role in the global economy.
Clients are becoming more demanding… and more educated
An astounding majority of service providers are saying that customers have now come to expect a lot more. Clients are asking for more value, better quality and faster deliveries of their solutions and services. They are also demanding more transparency and empowerment.
These increasing customer expectations are driving the growth of the range of services available as most of the executives have widened the scope of their service offerings in the last year.
The competition in several markets is becoming more intense each month and each year.
The studies are bringing forth agile concepts and innovative business models as key success factors to surpass the competition. In fact, a number of stakeholders are expressing concern about having to fend off the competition from new companies in addition to that of larger leaders in the industry. We know that the sector is undergoing a lot of consolidation. Companies are being acquired and merged in record numbers and new companies backed by solid financing and offering a different business model are being launched at an astounding speed. At the same time, new technologies are threatening to commoditize the high-ticket services which are the bread and butter of many stakeholders. Suffice to say that many executives whose business model no longer fits the changing market conditions are worried.
The growing trend towards deregulation is also playing a ongoing role in some sectors, by freeing up the restrictions on almost all aspects of service provider property and on the way they offer their services. This opens up the market for innovative business models that were not possible in the past thanks to regulatory constraints.
Furthermore, it is worth noting that many companies are still relying on their expertise as a key differentiation strategy. Based on the current speed of technology innovation, which is not about to slow down, combined with the fact that specialists will most likely be working somewhere else within a few years, this strategy is suffering from a lack of long-term vision.
To counter this issue, it seems obvious that having a focus on customer and employee loyalty is becoming a priority in order to stand apart from the competition.
The war for resources
One of the points raised by a majority of the companies surveyed was the constant need to find new skilled employees. As new technology and techniques are taking over the market, these businesses are constantly under pressure to keep up with the changes. If they fail to do so, one of their competitors will.
To solve this problem, some companies are implementing flexible working conditions to attract new employees or to retain their current staff, as well as leveraging the self-employed market and outsourcing to contractors. They have also become aware that this approach allows them to secure the right skillset at the right time, all the while avoiding to have to invest large amounts of time and money to recruit, train and manage resources internally.
Organisations that will be able to build on and make good use of various talent networks will stand out from the rest.
People buy differently
The evolution of the way people are buying is a growing phenomenon, especially as an increasing number of buyers search on line, on social media and on other non traditional channels to find the firm that will meet their needs.
Even the way people are getting recommendations is changing. In reaction to this trend, a growing number of companies are choosing to build their reputation on line, for example, with sophisticated content marketing and “organized and structured” engagement programs on social media.
Services purchased through “à la carte” models are attracting a growing number of supporters. It is quite compelling to be able to choose different providers for different tasks to then combine their unique expertise. In this context, online marketplaces, as an example, are providing customers with an easier way to find alternatives.
There is no doubt that many companies are feeling ill-equipped to adapt to all these changes.
These technologies are disrupting your daily life
Everything is pointing to the fact that technology is about to significantly change the way we use professional services.
Because technology is now offering more efficient ways to share knowledge which, by the way, lies at the core of professional services.
Because technology is giving birth to new ways of organizing and providing professional services, and is also altering the very nature of the expertise delivered by professionals to their customer base.
Even more revealing is the fact that technology could entirely replace low-end services that can be optimized or automated by self-service platforms.
Digital technologies are the biggest disruptors. They are primarily powered by social media, mobile devices, the Cloud, Big Data and artificial intelligence. However, new technologies cannot solely be viewed as a potential threat to the professional services industry, but can also become an opportunity to redesign the way these companies are conducting business.
Here are a few examples…
Companies that are integrating artificial intelligence, Big Data and hands-on learning to manage their tasks, processes and highly complex decision making will be able to enhance the speed, precision and, ultimately, the quality of the services they offer.
From problem resolution to prevention, real-time data access will shift the consulting approach from one of problem resolution to one of problem prevention, because potential issues will be identified earlier in the various work processes.
The increasing use of new communication technologies will extend the footprint of the business and will offer the ability to connect with clients all over the world.
Clients of the future
Customer needs are already changing and will continue to evolve as the current technology revolution continues to unfold. Here is a brief reminder of what to expect.
- More and more, customers will turn to technology and automation to secure services and knowledge. They will be able to do this via a services marketplace, knowledge sharing or through online consultants whose services are powered by technology and artificial intelligence.
- Customers will be demanding immediate results and will be looking for price competitive providers. They will require the pricing to be in line with the results and the value, rather than expressed as an hourly rate.
- There will be a higher value placed on the business relationship as clients and provider will work in closer collaboration when possible; on the flip side, it will also be quite common for clients and consultants to be located on different continents.
- Multidisciplinary teams will be gathered which will include several service providers in order to meet the client’s needs.
Digital transformation in no longer optional
The scenery is changing all around your organisation. If you have yet to notice, take a closer look and start your digital shift as quickly as possible, if you have not already done so.
If you delay making the changes that will be required to adapt to the new way of doing business, you are at risk of having to undergo a radical transformation of your company in the not-so-distant future. It goes without saying that the transformation of your business model will always be easier if you proceed incrementally and/or by sector. Take advantage of that time to explore new market opportunities and/or develop new service offerings.
You can find inspiration in the principles of continuous improvement management to ensure your change process will not weaken your company culture. Adopt a flexible organisational structure to facilitate the implementation of new digital technologies. And finally, never forget to stay focused on the core competencies that continue to add real value for your customers, today and in the future!
By Stéphane Poirier, Marketing Director at Nubik