The COVID-19 pandemic triggered significant changes in several industries, particularly professional services.
Emerging hopes for economic recovery in 2022 quickly faded with Russia’s invasion of Ukraine, and rising commodity prices and inflation rates signaled that a worldwide recession might be lurking around the corner. According to the International Monetary Fund (IMF), it’ll affect nearly a third of the global population.
That, in turn, implies further struggles for the professional services industry. In this blog, we’ll delve deeper into the current professional services market and discuss a few noteworthy industry trends.
The professional services landscape: a closer look
The worldwide professional services industry grew from $6.023 trillion in 2022 to $6.382 trillion in 2023. That’s a compound annual growth rate (CAGR) of 6 percent. The market is further projected to reach $7.77 trillion by 2025.
The segment with the brightest outlook includes design, research, promotional, and consulting services. Architectural and engineering consultancy services will bring the best opportunities within this segment.
While the industry’s expansion will continue in developed countries, developing economies will also jump on the bandwagon. This can be attributed to sustained GDP growth in countries like India, which will skyrocket investments in end-user markets.
Looking at these figures, it’s easy to assume that the future is bright for professional services firms. However, the industry’s market growth will come with increased competition and shifting consumer dynamics.
Challenges facing professional services firms
The last few years haven’t been kind to businesses in the professional services sector. At present, they are grappling with four critical challenges.
Slow and inefficient service delivery
The pandemic ushered in an abrupt shift to remote work, and professional services firms followed suit. However, most of these firms relied on legacy, on-premise systems, and siloed business operations. These created roadblocks to service delivery and resource utilisation and, in turn, affected customer experience.
While the world has returned to its pre-pandemic normal in many ways, the shift to remote work has not entirely abated. Most organisations are adopting hybrid work and business models to continue leveraging the productivity gains of remote work while enabling collaboration. This requires professional services companies to adopt modern systems likely consisting of new technologies and processes to ensure better service delivery to meet their clients’ needs.
Growing competition
As more professional services organisations enter the market, the industry will become saturated with service providers. From IT and engineering to accounting, financial services, and legal services, firms in every sector will have to compete for market share with new and established players.
While a saturated market means more options for customers, it’ll make it difficult to retain clients and build lasting relationships with them.
Evolving customer expectations
Customer expectations are changing in more ways than one. First and foremost, rising inflation rates and economic slowdowns impact consumers’ budgets and might force customers to cut costs, decreasing the demand for professional services.
Tech innovations are also making it possible for customers to address many of their needs themselves. For instance, a new startup can use design tools like Canva to create attractive banners for its website. Similarly, it can use artificial intelligence-powered chatbots like ChatGPT to develop web content. This could minimise its dependence on professional website development and digital marketing companies.
As technology makes customers more self-sufficient, they’ll need compelling reasons to hire professional services firms. To stay competitive, these firms must offer specialised, real-time help and expert guidance and deliver maximum value.
Labor shortages
In 2021, 47 million employees in the US quit their jobs. Millennials and Gen Z comprise a significant part of the workforce and want more from their jobs than just compensation and benefits. They want to work on their terms and won’t hesitate to resign from a job if it doesn’t meet their expectations.
While many people quit their jobs after the pandemic, they got re-hired by other companies, creating a shortage of qualified and trained personnel. For instance, businesses in the professional services sector witnessed unemployment rates lower than or on par with the national average. However, the industry saw an above-average hiring rate.
Despite mass layoffs in Big Tech, the Great Resignation might continue as more workers prioritise work-life balance and strong company cultures and values over pay scales. That could perpetuate the labor shortage further. Given that professional services firms thrive on client relationships, without the utilisation of technology, a lack of skilled professionals could be catastrophic.
Reimagining technology’s role in the professional services industry
The current professional services market emphasises the need for providers to overhaul different aspects of their business with technology. In other words, it’s high time you focused on the digital transformation of business processes.
From lead generation and nurturing to customer support, you must use modern tech innovations to improve service delivery and accelerate time to market. That’s what it takes to keep up with the customers’ demands in 2023.
The critical role of your CRM
Customer relationship management (CRM) platforms, such as Act!, can play a crucial role in this regard. They provide your employees with a centralised dashboard to track customer journeys and identify precise points of friction. This can help improve the sales pipeline and deliver seamless customer support, which is crucial for professional services firms.
Cloud-based CRM platforms serve as a single source of truth for different departments, such as marketing and sales, facilitating better collaboration within hybrid teams. They’re crucial for reinforcing client relationships and boosting retention rates.
A full stack of integrated tech tools
Besides CRMs, it’s also wise to deploy other tools, such as project management platforms and cloud storage solutions. It’s just as crucial to use data analytics tools to collect and process data and metrics from various channels, including the company website and social media profiles. This can provide valuable insights into customer behavior and purchase history and help identify gaps in your operations.
Successful digital transformation requires frictionless integration within your tech stack. Tools that are compatible with each other can help set up automation for workflows for routine tasks. This gives employees time to focus on more critical tasks, such as maximising operational efficiency.
For instance, if your CRM and email marketing platforms integrate with each other, you can automatically send emails to prospects at different stages of their journey. A personalised welcome email when they sign up on your website and a note of thanks when they book an appointment — these simple touches can take your customer experience up a notch and help you do more, even with a labor shortage.
Future-proof your professional services business with Act!
Running a professional services firm in 2023 and beyond will bring several challenges, from changing consumer demands to labor shortages. As the market becomes more competitive, you must invest in the right technologies to kickstart your digital transformation.
Act! provides a feature-packed platform to help you automate routine workflows and streamline operations. It empowers hybrid teams to deploy email marketing campaigns and optimize the sales pipeline anywhere, anytime.
Start your 14-day free trial to see Act! in action.
