Technology is by far the biggest factor in spearheading the professional services industry into a radically new direction over the next 10 years. The nature of expertise in this space will be challenged by this but also different client needs, employee requirements and desires as well will mean the skills and jobs in this space will be different in the future.
New technological developments are enabling new business models and changing the way people and businesses interact with each other. These transformative shifts have a driving force from megatrends, impacting business, economies, industries, societies and people themselves.
We see ground-breaking disruption taking place across most industries. All you need to do is look at the changing company landscape on Fortune 1000 over last 30-40years. Only a third of the original companies from the 70’s are still present, and this pace of evolution will continue to increase.
Professional services like accounting, legal and consulting have existed in society on the premise that as a society, it is impossible for us to know everything and therefore ongoing specialisation with practical experience to guide us and help us remains our natural need. Hence, so far they have not been highly impacted by technological developments. However, all signs are there that real change is coming and that the industry is at the pearly gates of a digital transformation. This will not only be around ways to organise and delivering professional services, but also how the expertise is practically being delivered will be challenged.
Technology could even replace these service providers because technology enables more efficient ways of sharing knowledge, which is the centre focal point of professional services.
The big watch out is the increasing skill shortage and it will be more difficult to find the right person for the job. Potentially medium sized firms are likely to face the biggest challenges, especially in compliance related services. Lower end services like discovery, analysis and comparative information gathering will very much be replaced with technology and self service platforms especially when technology will be able to plug into client data inputs for accounting and audits etc.
Accounting firms and professionals need to be aware and prepared for the challenges with new technology, new software platforms and services which will definitely change the expectations of clients. Automation and in-house client approached will limit the need for external professional services.
Even though there has already been forward moves in the legal profession, there could be more to come in next ten years. The move in global workforce, and clients changing their needs and asking for more value for money. The role of talent in this competitive market will change for individual firms.
Part of the consulting industry may benefit from this technology disruption as clients are likely to review their future strategies and go to market business models. There could be a need for technology based strategy consulting.
What will disrupt the Professional Services industry?
Technology and Artificial Intelligence – In the past, the professional services industry has been very slow to implement and adapt to technology, but at some point the industry needs to catch up. We cannot under-estimate the dramatic impact of technology and artificial intelligence to substitute and complement professional services which may impact the staff and people talent needed in organisations. Highly complex tasks and processes will be simplified through technology; analysing and research processes will get faster and easier; knowledge platforms will be used more, and could even move to crowdsourcing and knowledge sharing models. Artificial intelligence is no substitute for judgement, the core business of professional consultant, but really judgement is linked to uncertainty, whereas AI are beneficially great at reducing uncertainty.
Changing Client Demands – Changes in desires and the way clients buy their services. Corporate organisations are focusing much more on fixed price fees, looking for value for money, and looking for selective use so that is choosing different providers for different tasks. Clients in this technological evolution, have access to more information helping them to cost compare on online marketplaces.
Increased Competition – Enormous increase expected as new players enter the market or alternative business structures are being used. Traditional accounting firms are entering the legal and consulting market as their core audit market is halting and with increasing price pressure, they are looking for new workstreams.
Private equity backed commercial law firms challenging the traditional partner based law firms. There are new business models emerging as well like Lawyers on Demand.
Globalisation – A continuous trend of outsourcing professional services to emerging markets especially in the fields of compliance and other low value added services.
Impact of Digital Technology and Artificial Intelligence
Developments can be a threat to the professional services industry but also an enabler to reinvent the way business is being done.
Key insights are:
Increase in quality of services – Use artificial intelligence and big data for projects especially highly complex tasks, processes and decisions within accounting, legal and consulting. Knowledge and expertise in this space from the firm’s employees will be important to build now when recruiting.
Automation – Technology will speed up moving from pure craftsmanship to standardization and then systematisation. This may lead to highly specialised firms that can’t be automated.
From problem solving towards preventative – Access to real-time data will move the advisory approach from problem solving towards problems can be identified earlier in the process.
Digital marketplaces – The rise of the new platform economy will lead to professional services being sourced via online channels.
Increase in market reach – With more tech communication methods, this means firms will be able to truly expand their business to all of Australian and even around the world, which is a great benefit if your firm can set up these methods seamlessly.
More transparency – due to the ability to source services via online marketplaces and insights in expertise and talent becoming digitised.
Knowledge sharing and platforms – the growth of social networks for clients, with peer-to-peer advice and crowdsourcing abilities, will further challenge the craftsmanship core of the industry.
Clients of the Future
The needs of clients will also change and combined with the technology revolution it could be one of the main drivers that affect the way in which professional services will be delivered in the future.
Key insights are clients will:
Increasingly use technology and automation for obtaining services and knowledge.
Insist on immediate results and look for price competitive firms - Employees in firms will need strong skills in relationship building and communication over all non-physical channels.
Demand pricing based on outcome and value rather than hourly rates.
Keep increasing their in-house capabilities, through acquiring highly specialised staff, improved processes and more task automation opportunities.
How to Survive and Respond with talented employees and a Business Models of the Future
Choose direction – Firms could review services offered and geographic markets covered. Either you could refine and refocus meaning scaling back on some existing markets/services, maintain, adjust to complimentary services or conduct a radical transformation to keep up with the pace. For existing firms it will be much more difficult to have this transformation so it will be much more likely that new players in the market will disrupt the status quo with new services and new business models.
Continuous improving business models – Firms must improve their business models on a continuous basis which requires recruiting or evolving your existing team culture and mindset and commence to become a more flexible organisational structures. When implementing new technologies, firms should implement trial and error approaches.
Value based fees – Firms will need to replace time-based fees with fixed and outcome-based fees and adopt lean and agile business models.
Determine talent strategy – Talent strategies of firms will be absolutely critical in dealing with future technological challenges and the model for the use and source for talent should change. As geographic borders will fade through emerging technology, firms must increasingly tap into internal and external talent that are mobile across markets and regions. You could also look to offer more work-life integration because recruiting and retaining talent will become more competitive.
Overall, firms could look to have 3 key talent areas:
Partner and leaders that ensure the culture of the firm is withheld
Permanent staff who are the primary fee earners who should be attracted, retained and developed in the traditional way but taking into account the new skills needed in the technological age including regarding communication and relationship building.
Non-traditional staff and external resources, including project managers or data and technology experts - talent can be accessed through partnership arrangements or contractor models and they require alternative incentives and training structures. At the high end of the professional services industry it is likely that entrepreneurial professionals who have skills in utilising artificial intelligence systems will be able to work with large and complex issues and service their clients.
FinPoint Partners is committed to pinpointing the ideal brilliant minded talented candidates that are well-equipped for the future technological environment. For more information on how we are able to help you connect you with future talent needs, please contact firstname.lastname@example.org.