Like many industries, the professional services sector is facing upheaval from digital technology. New technologies will introduce new competitors, truly globalise markets and alter cost models, but research shows many professional services companies are complacent about the impact.

The Economist Intelligence Unit’s (EIU) recent global “Connecting Companies” study of more than one thousand senior business leaders found that professional services firms feel less threatened by emerging technology than peers in other sectors. Consequently, they are less likely to seek out new partnerships with technology companies to help transform their businesses.

Despite this, having business models that stress interpersonal interactions with highly skilled, credentialed employees, it is unlikely professional services will be immune from digital disruption. Developments in robotics and big data, global service marketplaces plus ubiquitous connectivity and video conferencing will have a profound impact on many types of professional services. Indeed, Deloitte has identified the professional services as a “short fuse, big bang” industry, meaning imminent and significant change can be expected.

Digital paradox

In a report from the UK Commission for Employment and Skills looking at the Future of Work, this paradox between the perceived level of risk and potential impact of digital disruption in professional services is further explained.

Specifically, by examining the jobs and skills of UK workers in 2030, amongst other things, the report observes how professional services employees “face a business environment defined by increasing uncertainty and huge amounts of data.” However, this in itself means that “the skills to manage complexity and risk, as well as the ability to analyse and translate vast amounts of data to inform decision-making, are required”.

The effects this could have on businesses and individuals working in professional services will be dependent on how digitally-led change is perceived within the industry.

According to Telstra’s EIU survey, only 42% of professional services firms expect digital partnerships to drive a business model change at their firms – which while still a reasonable amount is the lowest proportion of any industry. Interestingly, the survey found that 30% of professional services firms described ‘networks’ as the most significant type of digital partnership – this in comparison to 17% on average across other industries.

These networks include the likes of The International Accounting Group (TIAG), which brings together more than 100 small to mid-size accounting firms across 65 countries. Hence, these digital affiliations speak to the type of innovation we expected to see in the industry.

What’s around the corner?

The need for companies to innovate and evolve is hardly new, but what is unique is the fast pace of change in the emergence of new technology and customer consumption patterns. To adapt, businesses have been forced to explore non-traditional ways of thinking.

One important way to get started is for professional services companies to consider digital partnerships to access new technology and experiment without the costs, time and risks required with a large-scale, go-it-alone research and development program.

The EIU found such partnerships, be they contract-based alliances between two or three players to cross-industry networks and large, loosely organised ecosystems are increasingly common and important to businesses around the world.

There are a number of examples of these partnerships in action. In terms of a tie up between two giants, PwC and Google have announced a joint business relationship to bring new services to companies around the world. Meanwhile in the legal space, Axiom, a “provider of tech-enabled legal services” has been looking to disrupt how legal services are provided by embedding its lawyers in clients’ in-house departments. This not only helps reduce expensive office overheads, but it puts them closer to their clients.

Also LawCanvas, a Singapore-based startup under Telstra’s muru-D accelerator program, lets entrepreneurs and SMEs create legally binding agreements through an easy-to-use online platform, allowing them to save on the large sums lawyers typically charge.

Digitally constructed

Closer to home, and in a very different subset of professional services – specifically architecture and engineering - we are seeing a more compelling argument for digital partnerships. Mark Thompson, Managing Director at UK architecture firm Ryder, has witnessed how the construction industry is “notorious for working in silos”. However, in recent times this has changed, particularly with the advent of what is called Building Information Modelling software, which basically requires all those involved in construction projects to work from the same three dimensional model.

“You could say that a digital disruption is forcing people to work in a more collaborative way,” says Thompson. Indeed, digitally-led collaboration is something that has been happening for many years, across multiple industries. Today we are seeing vendors create specific collaboration offerings for professional services firms.

So clearly, digital disruption is happening. If the professional services sector continues to be hesitant about digital transformation and potential partnerships, they run the risk of being left behind. Now is the time to get ahead of the game and utilise digital technology as a competitive differentiator rather than a looming threat. Partnerships offer a great way to do this, as they allow for experimentation and access to technology at lower cost and risk, and we expect they will become increasingly popular in the years to come.

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About the connecting companies study
In June 2015, The Economist Intelligence Unit (EIU) conducted a global survey of 1,045 senior business leaders, half of whom were C-level executives or board members. A total of 20 industries were represented in the survey, with 123 respondents coming from the Professional Services sector.

 

By Tom Homer, Head of EMEA, Telstra

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