Many sectors are at risk of disruption from digital business models and services, and their organisational structures and practices face numerous challenges rooted in new technologies. Professional services such as accounting, law and consulting are areas where firms have continued to enjoy great success over the years despite every re-invention of how the business is run or structured. However, there is a sense that real change is coming, and a growing interest in how Digital Transformation might play out.
The future of the professional services industry will likely be radically different in the coming years. Rapid technological developments, shifts in global workforce demographics, changing client demands and the need to offer clients more value for money are all influencing factors. We are witnessing a tipping point where these changes will impact the competitive landscape and the expectations of future talent. Perhaps the biggest impact will not just come from new ways of organising and delivering professional services, but also the very nature of the ‘practical expertise’ that professionals deliver.
So, what are the main disruptors? It is difficult to predict the direction of travel. However, we do know that the following are key areas which are continuously being challenged.
The impact of technology and artificial intelligence – those in the professional services industry have a choice: disrupt or be disrupted. New technologies are already changing the way operations are run and have the huge potential to drastically change the way the industry functions in the future. Companies must be prepared to embrace this or be left behind. Artificial intelligence (AI) and machine learning are just two of the technologies that are currently having a significant impact on today’s enterprise, and the appetite is growing. More than one-fifth of UK businesses have already invested in AI projects so far, with more set to follow.
A change in skill requirement as a result of exponential growth in computing power combined with increasingly sophisticated approaches to artificial intelligence mean that systems can potentially do the hard work of reading and analysing vast amounts of data. Such evolution will also have its implications on professionals – will “robots” force experts to find other routes to the top? How can people build expertise to become experienced professionals if the machines take over the basic leg work that people used to do on their way up the career ladder? The skills of the future adviser will be substantially different than those of today. New roles will emerge that use the professionals’ experience and judgement in a different way, supported by the analytical power of machines.
A change from the traditional professional services firm is as prominent as ever. The firms continue to exist and enjoy the benefits of technology optimisation and efficiencies, but are eventually displaced by that technology, ultimately leading to dismantling of the professions. New jobs and roles will emerge thanks to technology changes, whilst others are destroyed. It can be argued that the professions will eventually be reshaped, at least in the way we know them today.
Increased competition is absolutely expected as new players enter the market, or alternatively, business structures of well-known players continue to change or reshape. Traditional accounting firms are starting to enter the legal and consulting market, as their core audit market sees signs of turbulence with increasing price pressure and a growing readiness to look beyond the usual suspects for this kind of work. We have started to see external investment and multi-disciplinary practices increasing market share. The ownership model of many professional services outfits is in question – the ever-occurring debate of PE backed vs the traditional partnership model is in full force!
Skill shortage; the continued challenge all professional services face. The battle of talent vs client wins (delivery of work). It’s an interesting argument: will the potential change of ownership model encourage professionals to stay within the profession or fix the current issue of succession.
How important is the client perspective on all of this? The way clients buy their services and how they wish to be advised will undoubtedly change as a consequence. Corporate buyers will increasingly focus on value and demand more transparency on pricing. There is also no longer much loyalty, with many firms choosing different providers for different tasks. Access to information will also be readily available. Clients will be able to compare the cost of professional services via online marketplaces for example, and search for alternative options more easily.
The increasing trend of deregulation will reduce restrictions on almost all aspects of ownership of service providers and the way they offer their services. This will open up the market to innovative business models which were not possible previously due to regulatory restrictions.
And finally, further globalisation and a continuous trend of outsourcing professional services to emerging markets, especially in the fields of compliance and other low value-added services.
Whilst the above demonstrates several areas in which digital transformation and general business evolution will impact the professional services industry, there are numerous opportunities to be taken advantage of. Amongst all this disruption, the fundamental message is to be smart, followed by investing at the right time. Investing too early when the tech is not mature enough may result in overspending. However, invest too late, and firms risk ceding valuable ground to the industry’s front-runners. This uncertain position also means that the human capital side of the industry must evolve quickly, becoming more fluid in order to keep in line with technological changes. The skills profile of the individuals recruited into professional services is changing. We can all see an increased need for not only traditional management consulting and accounting skills, but also data scientists and coders.
The professions need to have a greater understanding of how technologies are changing the workplace in order to understand what skills are needed for the future. It is also important to note that the professional services industry is not alone in this issue; all businesses need to work together to understand how people can be prepared for the changes facing the workforce.
This change will mean that people strategies in the profession combine employee culture closely with AI strategies. Numerous roles will need to be re-defined, and many people will need to be upskilled or redeployed into new areas. As an industry, it will need to be much more disciplined about how it recruits and retains people with in-demand skillsets.
To be considered innovative and ahead of the game, professional services firms will need to ensure that technology and people strategies are aligned and working in harmony. Firms need to think about the calibre of people they need, to be able to manage this shift, and the disruption it will bring to organisations. People ‘buy’ people, top talent is still needed across all industries however, firms need to become savvy around upskilling and redeploying the talent they have and want to attract.