Professional Services: approaching a digital tipping point
Disruptive technologies are fundamentally changing the economics of Professional Services.
The Professional Services sector boasts a rich history and a burgeoning reputation as a growth industry and major source of employment, in both developed and emerging markets. In the United States, for example, professional and business services is now estimated to be the second largest employment sector and is expected to grow to approximately 21 million jobs by 2024.¹ It also plays a critical role in helping its clients set their strategic direction, remain compliant, predict future risks, recruit talent, and produce and audit their financial results.
The ability of its practitioners to adapt to changing demand has been important in driving growth in the Professional Services industry. As digital disrupts other industries, we are seeing this agility in action again today.
The Professional Services industry may be proficient at evolving its offerings to clients’ changing needs, but perspectives differ on whether the industry itself has been significantly transformed by digital disruption. One school of thought sees Professional Services in the vanguard of digital transformation, with high levels of digitalization across most aspects of the sector. An alternative view holds that, despite outward agility, it has not yet been disrupted to the same extent as some other industries.
Our assessment is nuanced. We believe that, though there has not yet been a seismic disruption to shake the entire industry, the shifts under the surface are stronger than many people realize. This suggests that the industry may be approaching a tipping point.
To deepen our understanding of digitalization in Professional Services, we worked with a panel of industry executives to assess disruption at a granular level, by focusing on its impact in three areas: business model, operating model and competitive leader board. There was agreement that the industry’s business model is being most disrupted and the leader board the least. Opinions differed as to the extent of change to the sector’s operating model, perhaps because of the varying degree of disruption across segments within Professional Services.
Impact of technology by industry segment
Source: World Economic Forum / Accenture analysis
Digital innovation and shifting economics
Artificial intelligence (AI), data analytics, machine learning and platforms are among the most important technologies disrupting the industry. AI supports professionals to learn, think and perform better; analytics and machine learning are revolutionizing insight generation; and platforms are disrupting traditional business models by bringing buyers and suppliers together.
Digital innovation is contributing to a fundamental shift in the industry’s supply and demand dynamics. On the demand side, ubiquitous data and pervasive technology are making professions more transparent, giving clients a greater understanding of the sector and raising their expectations of receiving high-quality professional expertise at an affordable price point. On the supply side, crowdsourcing, rapid advances in machine learning and robotic process automation (RPA), and the modularization of work are helping create a new source of supply in Professional Services. The development of digital platforms offers a convenient alternative to the traditional physical marketplace for services, as clients and customers can now seek professional help online.
The Professional Services industry should view digitalization as an ally as it strives to provide quality expertise at scale to businesses and individuals, and further improve its operational efficiency. We see four key themes emerging:
|Business model transformation|
Digitalization empowers firms to change every facet of how they go to market: their services, value propositions, target customers and price points. Firms are repositioning themselves with new services for the digital world and fostering an ecosystem of partners across the industry value chain and beyond.
Expertise is the primary offering of the Professional Services industry, and traditionally it has been provided by humans. However, emerging technologies such as analytics, AI and deep learning are augmenting professionals’ abilities to ‘do’, ‘think’, ‘learn’ and ‘feel’. This can both enhance the quality and volume of expertise, and lower the cost to serve.
Companies that can anticipate change, react faster than competitors, and adapt their strategies and processes in light of disruptive events are able to stay ahead of the curve. Organizations are becoming more responsive by adopting a flexible workforce, promoting an agile culture, and investing in smart digital infrastructure to encourage productivity and creativity.
Reimagining the employee experience to offer the right value proposition will be imperative for firms in the digital world. They will need to leverage new technologies or models to source talent, and maintain high engagement levels by ensuring that talent is appropriately trained and dynamically managed.
Inspiring leadership for digital transformation
Strong board and CEO-level sponsorship is vital if a company is to truly embrace the opportunities that digital disruption presents. A digital culture is increasingly important for business growth; responsibility for nurturing that culture starts with leadership.
To help executives become effective digital leaders, we have developed a set of potential actions. Our recommendations include:
- Challenge what you do today. Be bold in exploring options for dramatically changing what you do (business model) and how you do it (operating model).
- Review your priorities for automation and machine learning, and implement a pilot.
- Deploy incubator capabilities to create marketplace differentiation by opening up to a new ecosystem of start-ups, customers, think tanks, suppliers and even competitors.
- Work collaboratively with educational institutes to identify the skills of the future and the appropriate time to invest in them.
The effects of digital innovation on Professional Services will ripple out beyond the industry. The net impact of digitalization is expected to be positive for society but some groups may lose out economically. Increased automation will raise difficult ethical decisions and may even reawaken the spectre of ‘technological unemployment’. Industry, policy-makers and regulators will need to collaborate to tackle the societal challenges that may arise from the digitalization of Professional Services.
1 US Bureau of Labor Statistics, Employment Projections, 2015.