Few industries are as dynamic or as challenging as professional services.
Analysts indicate that the professional services industry growth rate will be as high as 10 percent annually for many segments. Yet price declines due to automation and competition from in-house services will put great pressure on the revenues and profits of professional services. The same technological innovations that create new opportunities for the industry also intensify the skills shortage that currently hinders the growth strategies of many professional services companies.
The number-one goal of professional service providers is managing growth while transforming the organization into a digital entity. This applies to all professional specialties, including technology, accounting, consulting, marketing/public relations, and legal.
Here’s an overview of the outlook for professional services and the trends that will have the greatest impact on the industries’ bottom line.
Professional Services Growth Rate Uneven Among Sectors
There is agreement among professional services industry analysts that overall revenue for the sector will continue to grow,For example, a new report issued by Orian Research predicts that the global professional services market will experience a compound annual growth rate (CAGR) of 8 percent between 2019 and 2026.
However, some segments of the industry are forecast to expand faster than others. Within the professional services industry, firms that offer design, research, promotional, and consulting services make up 72.8 percent of the total market, according to the Business Research Company. Yet the professional, scientific, and technical segment of the professional services industry will experience the highest CAGR at 10.9 percent, compared to a CAGR of 5.4 percent for the industry overall, as reported by digital services firm Alithya.
Additionally, the growing importance of social media to professional services companies presents them with a conundrum: provision of professional services via social media creates tremendous opportunities for growth, but the dearth of workers with the required social-media skills prevents companies from capitalizing on these new opportunities.
Similarly, the same technologies that allow professional services firms to expand into new areas and operate more efficiently also put downward pressure on pricing, which makes revenue growth targets more difficult to achieve, according to the Wrike blog. So, while there is room for professional services companies to grow, they must adapt to a changing marketplace to do so.
The Trends that Drive the Professional Services Market
Professional services support every aspect of a business’s operations. They encompass occupations from accounting and human resources to software development and social-media marketing. Tax and consulting firm RSM points out that artificial intelligence, enterprise platforms, and other software will not replace professional services, but they will change the way professional services are delivered. They also have the potential of driving down the prices companies pay for services.
To remain competitive, professional services will have to automate manual tasks to allow employees to work on high-value projects. They must also raise their profile with clients by applying advanced analytics to learn more about their customers’ goals and needs.
These are among the other ways that professional services can capitalize on industry trends:
- Specialize: Learn the ins and outs of certain key industries. Doing so allows companies to individualize their service to clients, focus on profitable areas, and mitigate risk.
- Adapt: Technology has disrupted the traditional business model for professional services, so success depends on the company’s ability to respond to AI-based automated services, virtual organizations, and modularization.
- Collaborate: Technology also changes the way projects are managed. Instead of individual contractors being responsible for separate project tasks, all third-party contractors may develop and submit an integrated proposal, which allows them to share the risk but gain higher profit margins.
- Invest in diversity: The more culturally diverse a service company is, the more opportunities the firm will have. Clients are increasingly diverse, and they demand that their business partners understand the importance of representing all types of life experiences and cultural background.
How Professional Services Firms are Plotting Their Growth Strategies
In the face of such fundamental changes to the way professional services are marketed, it’s important to remember that growing the business through existing clients remains the most effective strategy for most companies. A survey of professional services conducted by Alithya identified the most popular growth strategies in the industry:
- Increase business with existing clients (cited by 61 percent of respondents)
- Offer new products or services (57 percent)
- Reduce operational costs (41 percent)
- Mergers/acquisitions (33 percent)
- Geographic expansion (27 percent)
While most businesses focus their marketing efforts on acquiring new customers, doing so costs up to five times as much as retaining current customers, according to Business2Community.
To achieve their growth goals, professional services are turning increasingly to digital marketing, as the Hinge Research Institute reports. Inbound marketing techniques such as webinars, case studies, and high-value gated research are gaining in popularity as a way to demonstrate a company’s expertise in specific subjects.
These are the most popular digital and content marketing methods of professional services:
- Social media (used by 54.9 percent of professional services in 2019)
- Email marketing (51.6 percent)
- Blogging (45.6 percent)
- Webinars (32.5 percent)
- Case studies (31.5 percent)
- Marketing video (24.7 percent)
- Downloadable gated content (23.4 percent)
- Primary research (21.5 percent)
The Hinge study of professional services found that professional services that conducted research on their target audience at least quarterly grew faster and were more profitable than their counterparts who did not research their target markets as frequently. The research achieves two purposes:
- The information helps to shape the companies’ branding and marketing strategy; it also improves the firm’s visibility with clients and allows it to gain a better understanding of the client experience.
- The issues and topics the companies are researching are important to their clients, so the research results can be marketed separately as high-value content.
Much of the professional services industry growth rate depends on the ability of companies to adopt new technologies, business models, and marketing approaches while simultaneously enhancing their relationships with their existing clients. Among the challenges they face in achieving their growth goals are finding and retaining talented employees who are able to deliver the services clients need, and responding to the pricing pressures created by AI and other disruptive technologies.
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