Impact of Digitalization on the Professional Services Industry: Challenges, Opportunities, & Growth
Updated: Oct 15, 2021
We all know how the digitization drive is dramatically transforming business models across several industries. If you’re yet to catch up, you probably might be facing some setbacks in your business or be missing out on growth opportunities. Digitization or digital transformation is like a moving train headed for greener pastures, forcing people to abandon old terrains and practices that they are used to and just jump aboard.
In the long run, a lot of those who weren’t so swift at jumping on board were forced to play the catch-up game. Being that the professional services industry is a unique area with unique challenges, the growth of most businesses in this area has primarily been hinged on digitization. For instance, financial advisors and accounting firms now use technologies with advanced algorithms to determine the eligibility of borrowers before approving lenders.
Nowadays, credit checks and regular paperwork is augmented with artificial intelligence to ensure only smart business decisions are made. The same essentially applies to other professional services firms. Professional services firms range from consulting services to technology services, legal, HR services, and everything else in-between those.
Challenges Facing Professional Services Industries
While the COVID-19 pandemic brought on new challenges to many businesses, professional services firms, according to a Forbes publication, generally have three challenges, which are:
The increasing speed of doing business
Digital delivery of services, such as software, games, e-books, and music streaming services.
The shift to an outcome-based business model: unlike the traditional rate-based business model that is based on the time taken to achieve a particular business outcome, the outcome-based model is based on the outcome itself, as well as the work required to achieve the result.
Factors Driving Digital Transformation in the Professional Services Industry
Digitization of Workforce Management: Workforce management is becoming more digitized, leading to increased transparency, better cost-efficiency, more accurate estimates, etc. HR departments are increasingly seeing how to improve employee management and HR processes by using digital tools and techniques.
Evolving Customer Expectations: as customer demands and expectations continue to shift, professional services firms are forced to switch to faster and more agile processes and tools to keep up.
New Technology: Emerging technology is one of the factors influencing the speed of business, outcome-based business models, and digital service delivery. Technology is critical in helping professional services firms improve employee experiences and business processes, and speed up service delivery. For example, artificial intelligence, machine learning, deep learning, and robotic process automation are dramatically transforming business models while also cutting down the cost of operation.
Cloud-based Technology: Another factor driving digital transformation in the professional services industry is the emergence of cloud-based technology. Virtually all companies of all sizes now have access to advanced business solutions based on the adoption of cloud-based technology. It also allows businesses to scale and grow faster.
How Can Professional Services Firms Leverage Digitization?
Planning and Forecasting
In response to a rapidly changing environment, organizations can adapt their processes by investing in strategic planning, starting from talents sourcing to improving employee engagement and experience and, of course, optimizing operational processes for the best results. All these begin with careful planning, and thankfully, some planning tools like SWOT analysis and OKR (Objectives and Key Results) exist today to make this even easier.
Talent Management and Development
Every business has its fair share of employee turnover, which can equally be costly. Unfortunately, the professional services industry is not immune to attrition. To ensure employees do not leave when they are needed, organizations need to improve their employee engagement practices to reflect standard practices and organizational goals. This way, staff members are happier to settle into their roles and produce better results at work.
Client and Project Profitability Tracking
Digitization also has a role to play in improving business relationships with your clients. Making tracking project profitability, for instance, a norm can help businesses improve profitability. This is because they have real-time insights on the costs of each project and the revenue generated as the transactions happen. The lack of operational insights and project cost tracking can impact business performance adversely.
Cloud-based solutions are also enabling firms to achieve higher profit margins and improved service delivery. By gaining key insights into key business processes from a centralized location, the speed of business is faster, client issues can be resolved faster, and access to important documents is even easier. Many businesses that have moved all of their business processes to the cloud have reported better workflow, less cost of operation, faster solutions, and, of course, better revenues.
Focus Areas for Professional Services Firms
Cloud-based technology is obviously an important aspect that businesses need to consider as they try to adapt to digitization. This is because it can provide the capability and versatility that professional business services like legal services, consulting, accounting, HR outsourcing, etc., need to transform their business processes.
In addition to that, professional services firms can consider adopting an outcome-based business model. To improve service delivery models and optimize business processes, they can also incorporate new technology and digitalize their workforce management.
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Also, as leading partners in the PEO, HR, payroll, and benefits outsourcing marketplace, we provide result-oriented services for small and medium-sized organizations and government contractors, serving as a trusted partner in integrated human resource compliance, risk management, employee benefits, employment practices liability insurance (EPLI), and payroll processing.