Technology, productivity and talent management emerge as key issues in a 2017 report on the global professional services industry.
For its 2017 Professional Services Maturity™ Benchmark Report, US-based SPI Research surveyed 416 firms around the world from September through December 2016 in order to identify general developments in the industry as well as specific factors driving performance. The report covers all major professional services segments, including accounting, advertising/marketing, architecture, engineering, management consulting, IT and research, as well as several healthcare-related verticals. The exception is the legal industry, which was omitted due to its highly specialised nature.
SPI found that overall, professional services remains one of the of the global economy’s fastest-growing industries. This is a result of companies in most other industries increasingly outsourcing their non-core business processes. Year-on-year growth has slowed globally, however, from 10.2% in 2015 to 9% in 2016. By region, EMEA experienced marked improvement, while growth declined in the Americas and Asia-Pacific. In Europe, following a slow period, revenue growth picked up, climbing from 6.5% in 2015 to 10.3% in 2016.
Organisations focused on the cloud, security, analytics and artificial intelligence are seeing the most growth, while consolidation and price pressure are the dominant themes in more traditional segments, such as accounting and architecture.
Productivity improvement stands out as a critical component of success. In its tenth year of conducting the annual study, SPI Research observed that professional services revenue growth has exceeded headcount growth every year, suggesting the industry is “continually ratcheting up output”. Indeed, professional services firms are improving productivity in leaps and bounds. This development is linked mainly to technology – specifically the use of cloud-based business applications and remote service delivery. Far less time and cost are being spent on administration and travel.
A significant decline in headcount growth highlights issues around talent management, including recruitment and retention. This decline is related to a growing talent shortage in the professional services sector, with attrition rising to its highest level. Because professional services is nearly 100% human capital-based, attrition is one of the most vital metrics to watch. According to SPI Research, “Growth in this segment will depend heavily on concentrated efforts to attract and use skilled talent”.
Effective strategies for recruitment and retention, as well as development and succession planning, are especially crucial with regard to leaders. Strong leadership, particularly in areas such as organisational alignment, team-building, business processes and execution, is shown to have more of an impact on performance than any other factor. Based on its findings, SPI asserts that leadership impacts “all facets of the business, delivering stronger growth, higher billable utilization, better on-time project delivery, more winning proposals and higher levels of customer satisfaction.”