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Evolution and disruption trends in professional services

Flexible service models, strategic partnerships and innovative technologies are top trends across the services industry as we approach 2020.

September 26, 2019

Professional services trends include flexible service models, strategic partnerships and innovative technologies

‘Disruption’ has become a familiar word over the last few years—nowhere more so than in the professional services industry. Customer expectations are evolving: the competitive landscape is heightening, and technology continues to change the industry’s modus operandi. With these factors in mind, companies must adapt and evolve with changes quickly and effectively to remain competitive.

Clients need more flexible service models

The professional services market is changing, from what clients expect a good service to look like to the way in which they engage with services companies.

Against a backdrop of rapid digitisation and a shift toward cloud-based technologies and Agile methodologies, clients today expect ‘more value, a higher quality of work, and a faster delivery of solutions and services’, according to a survey of 576 executives by Deltek (a global provider of software and information solutions). This demands that clients own strategic change rather than be driven by tactical change. These heightened demands are emphasized in the survey, with 89% of services executives stating that ‘they had expanded services offerings significantly for clients [in recent years]’.

Graeme Adams, delivery manager for TEKsystems, suggests that some notable client changes in the U.K. services market include:

  • Partnership working.Shared outcomes are agreed between clients and third-party service suppliers with joint accountability in place to help both sides achieve successful delivery. These partnership models replace rigid in-house or fully outsourced service models.
  • Service customisation.Increased tailored and flexible service models to suit agile ways of working and evolving project requirements better than traditional, inflexible linear service contracts. This blended and flexible service approach is required to navigate the fast pace of change in modern service delivery, equipping clients to scale or switch technical capabilities across their project life cycles on demand.
  • SME thought leadership.More clients expect professional services companies to bring SME industry expert leadership that helps build their overall technology strategy and positively influences technology communities.

Strategic partnerships are the future

These changing behaviours are challenging traditional packaged service models and encouraging companies to move toward a value-orientated, solutions-based approach underpinned by a strategic partnership.

Many companies still rely on their people’s expertise as a key differentiator. However, because of the pace of change and the fact that consultants tend to move jobs more regularly, it is more critical than ever for companies to put client outcomes at the heart of their strategies to stay ahead.

Fiona Czerniawska of Source Global Research says, ‘it’s a rare consulting firm that puts itself in its clients’ shoes’. Moving forward, however, we expect to see more professional service firms shift to value-based strategies as they try to become ‘trusted advisors’ rather than just service providers. Focussing on client service has suddenly become the only metric that matters.

A competitive challenge to traditional consultancies

The level of competition in certain markets is also becoming more increasingly intense over time each year. According to a survey by Nubik, ‘80% of [executives] said they had noticed [this increase in] competition in the last 12 months’.

Although the big four—PwC, Deloitte, EY and KPMG—still hold a sizeable market share, these firms are no longer enjoying the monopoly they once had and are being increasingly challenged by smaller competitors who offer unique alternatives to traditional consultancies. These smaller firms also offer considerable price advantages resulting from lower operating costs and practice agility. A client can choose ‘a la carte’ services from a selection of these smaller consultancies, which also offer considerable price advantages from lower operating costs and agility in their practices.

Technology Innovation and AI

Along with the shifting customer and competitive landscape, technology is evolving at a faster pace than ever, and this is changing not only the services clients offer but also the way they use professional services.

Digital technologies may be the biggest disruptor of all. Advancements across platforms, including social media, mobile devices, cloud, big data and AI, are collectively progressing the industry through automation, speed of delivery and enhanced customer services.

There are mixed views on whether technology advancements create opportunity or threat for professional services, with concern emerging that AI could replace employment opportunities in the future. However, according to Nubik, ‘New technologies [can’t] solely be viewed as a potential threat to the professional services industry and [could also be considered] an opportunity to redesign the way these companies are conducting [their] business’. According to a LexisNexis report, it is unlikely that jobs will be replaced by robots just yet.

Overall, the industry is currently in a state of flux and is showing no signs of slowing down. With 2020 just around the corner, it will be important for firms to embrace these changes to ensure their future in the market next year and beyond. Traditional services models are becoming a thing of the past, and the demands of more complex clients are forcing the traditional consultancies to expand—creating new opportunities for smaller, more nimble players.

Technology will continue to play a huge part in the way the market looks and feels and could create huge opportunities for those who can adapt quickly or even get ahead of the curve.