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What used to be an industry where specialists billed for their time and relationships drove growth is changing fast. The professional services industry, like nearly every type of business, is undergoing tremendous transformation in the digital era.
Old ways of working and doing business simply won’t cut it. Today, professional services firms of all sizes must adapt by delivering services faster and more efficiently in order to meet customer needs and remain competitive.For services firms that implement digital processes and new business models, there’s plenty of opportunity. The global professional services market is expected to grow from about $65 billion this year to $88 billion by 2028, according to Statista.
Here are three key trends reshaping the professional services industry:
- The rise of automation and AI
- Attract and retain talent
- Everything as a Service (XaaS)
Professional services industry: Working faster & smarter
Every professional services firm, from legal and accounting services to IT consulting and engineering, is under constant pressure to boost efficiency and productivity. The problem, however, is that many are hamstrung by siloed systems and functions.
At the same time, the growth of digital services is increasing the volume and complexity of data in the professional services industry. This results in poor visibility, which makes it hard to focus on the right metrics to improve performance.
Here’s where rapid advancements in technology, particularly automation and artificial intelligence, can play a key role. By leveraging automation and AI, professional services firms can streamline routine tasks and augment decision-making to deliver projects faster and more efficiently.
Incorporating generative AI into professional services isn’t about replacing jobs. Rather, it’s about optimizing workflows and supporting virtual collaboration on a global scale. This allows professionals to focus on higher value tasks that require critical thinking and creativity.
More and more business leaders are looking to adopt generative AI. According to an IDC global study, 65% of C-suite executives included gen AI as a top investment priority in the short term.
IDC predicts that by 2027, gen AI-powered digital assistants will be the user interface for 25% of interactions with enterprise software, including software development.
By leveraging automation and data analytics with a unified business platform, firms can work more efficiently and gain insight that enables them to innovate and focus on the most profitable engagements.
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Professional development with an eye on the future
In the professional services industry, it’s all about the talent. Expertise is the core value proposition. As such, firms have to make sure their people are equipped with the right skills and know-how to help clients solve their problems not only today, but tomorrow.
The rapid pace of technological change is rendering certain skills obsolete and creating a demand for new ones. Professional must engage in continuous upskilling and reskilling to remain relevant in their roles.
In an IDC survey of mid-sized professional services firms, training and upskilling employees was a top priority cited by 66% of respondents.
Upskilling is another area where generative AI can play a role. Digital mentors that use generative AI can provide instant and adaptive training to fill skill gaps.
Investing in employee development is essential for attracting and retaining professional talent, especially in a tight labor market. Employees who feel supported in acquiring new skills or refining existing one enjoy higher job satisfaction. This makes them more likely to stay with the company, where they feel fulfilled and engaged.
Companies that prioritize employee development are known for their commitment to growth and learning, which boosts brand reputation.
XaaS in professional services: Digital delivery drives transformation
Learn what XaaS means for professional services, the benefits of digital delivery models, factors to consider, and how to get started.
The drive to Everything as a Service (XaaS)
One of the biggest trends in the professional services industry today is the shift away from the traditional time and materials model to innovative subscription-based models and Everything-as-a-Service.
Customers today want scalable, on-demand and easy-to-use services, and the professional services industry is responding with new models that feature flexible pricing based on business outcomes rather than time and effort.
According to an IDC Analyst Brief, 91% of midsize company leaders list new business models/services as a way to address evolving customer expectations.
The global XaaS market is expected to reach $624.1 billion by 2027, up from $98.6 billion in 2021, according to research firm IMARC Group.
XaaS gives professional service firms the ability to expand their offerings and customer base by packaging their knowledge and expertise with digital services offered on global platforms via subscription. The model helps firms provide scalable, easy repeatable services that generate revenue on an ongoing basis.
With XaaS, firms can drive growth, increase customer loyalty, generate predictable, recurring revenue streams, and differentiate themselves from the competition.
Building for 2024 and beyond
While there’s much opportunity ahead in in the professional services industry, there’s a lot of work ahead. Change is never easy, and digital transformation requires shedding old habits, entrenched models, and legacy systems.
The journey starts with careful planning and then building a foundation of supporting technologies. A unified digital platform gives professional services firms the agility to support new business models at scale and continually adapt to customers’ changing needs and preferences.
The professional services market is only getting more competitive as automation and cloud technologies make it easier for new entrants to offer services at lower costs. Companies must transform to deliver seamless services and personalized experiences that drive loyalty.
Digital transformation is a continual process. Firms that remain agile and innovative will position themselves for long-term growth.
