Why The Professional Services Sector Is At A Crossroads And What That Means For Business Leaders

Posted by Claire Hodgson on March 26, 2018

Professional Services Sector

The professional services sector is in a state of flux. While globally the sector continues to grow, competition has intensified and margins have gotten tighter. Suppliers no longer have the monopoly on specialized knowledge they once had and corporate buyers want “more for less”. Emerging technologies are upending traditional delivery models and signal more disruption to come.

To explore these issues we surveyed 700 senior decision-makers from professional services companies around the world, distilling the results in our latest report Insight to action: the future of the professional services industry. Most respondents said they felt concerned by this more challenging business environment and unprepared for the future.


Industry Report

Professional Services Trend Report 2018



Key Stats

  • 52% of decision makers think the increasing complexity of projects will be the number one challenge for project management in five years’ time, followed by highly bespoke services (38%) and commoditized services (34%)
  • A third (33%) of CEOs/managing directors say better defining pricing models is a top priority over the next five years
  • Defining competitive advantage is one of the top three improvement priorities (27%) over the next five years, globally
  • 60% globally say maintaining an innovation portfolio will be one of the biggest business development priorities in five years
  • 81% of CEOs consider their business unprepared for the risk of disruptive technologies.

Better, Faster, Cheaper

Client management professional services sector

As our research shows, one of the biggest threats to professional services firms in the coming years will be increasing competition. New players are entering the market at a rapid rate while old ones diversify. Operators from emerging economies are giving Western incumbents a run for their money too.

This will mean more demanding clients who no longer stick with just one supplier, preferring an á la carte approach. Buyers are already pushing back against concepts such as billable hours and requiring more transparency on costs. Not surprisingly, decision makers see “defining a competitive advantage” as a top-three improvement priority over the next five years, while a third (33 percent) of company bosses say better pricing models will be key.

Transformative Technologies

Disruptive technologies are adding to the sector’s woes and demand an urgent response. Clients can already access a much greater level of insight into how their profession works online, for free, or for much lower prices. And advanced technologies are doing more of the lower-end tasks once handled manually by professional services firms.

The trend is likely to accelerate as new innovations such as artificial intelligence, virtual reality and block chain mature. Companies must adapt and yet 81 percent of chief executives say their business is unprepared for technological disruption.

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Growing Pressures

Delivering profitable projects

As a perfect storm of challenges gathers above the industry, professional services firms will find it increasingly hard to deliver projects profitably. This is while they will have contend with an ever more complex regulatory environment and skills shortages, which make the practicalities of delivery more difficult.

Not surprisingly, 52 percent of decision makers say that the increasing complexity of projects will be the number one challenge for project management in five years’ time, followed by highly bespoke services (38 percent) and commoditized services (34 percent). It calls for creative solutions to ensure margins are maintained.

Action Is Not Optional

What our research unequivocally shows is that professional services companies must prepare for uncertainty. Leader must embrace and champion sensible management strategies and processes, along with the technological systems to support them.

They also must be nimble and make “enterprise agility” a motto. As 60 percent of respondents globally acknowledge, maintaining an innovation portfolio that enables them to continuously adapt will be crucial in a more competitive market.

In Insight to Action we look at the industry’s challenges in more detail and set out clear action points for firms and business leaders in the professional services industry looking to stand up to the future.


2018 Industry Report

Professional Services Trend Report

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