Industries
This service is primarily available to the following industry sectors:
Professional Services Sector
The overall professional services sector consists of industries providing services which include scientific research; architectural, engineering and technical; legal and accounting; advertising; market research and statistics; management and related consulting; veterinary; and other professional services. North America is the largest regional market for such services, followed by Western Europe, and then the Asia Pacific region.
According to recent research, key professional services challenges include predicting resource requirements, maintaining profitability, and the retention of employees and clients. As a result, professional services firms need to be on the lookout for some of the following telltale signs: complex operations, bureaucracy, leadership gaps, poor client retention, poor talent retention, inability to predict project resourcing needs, limited data and visibility, outdated legacy systems, ineffective change management and decreasing profitability.
This program provides professional services leaders (both aspiring and incumbent) with comprehensive practical skills and tools to effectively face these challenges, covering trust and communication, leadership, services marketing and client development and retention.
The following paragraphs review each of the major industries which comprise the professional services sector, highlighting current position and outlook.
Engineering Consulting Services
Engineering consulting services industry firms provide engineering consulting services, which typically relate to the design, development and use of infrastructure projects, machinery, processes, and systems. Industry firms offer advisory services, feasibility studies, preparation of preliminary and final plans and designs, technical services during project construction phases, and inspection and evaluation of construction and engineering projects.
The Engineering Consulting Services industry has heavy regulation. Firms are subject to a range of regulations, including practitioner qualifications, codes of ethics, building and design regulations, environmental policies and insurance coverage. Industry bodies provide some assistance for engineering consultants and promote and educate members involved in engineering consulting.
Engineering consulting firms reap the benefits from rising capital expenditure on non-residential construction, driven by an increasing number of industrial complexes and transport buildings, including airport terminals and train stations. Firms are differentiating themselves by offering services throughout a project’s life cycle, including engineering, procurement, construction and management (EPCM).
The major drivers of the industry include the level of activity in the construction industry, public sector capital expenditure, consolidation within the industry as larger firms seek to expand and the emergence of multidisciplinary firms to operate as one-stop shops.
Management Consulting Services
Management consulting industry firms provide clients with advice and strategies to solve a range of complex business issues. These issues include financial performance, business strategy and operational structure. Management consultants aim to improve a client’s overall business performance.
Consolidation has risen over the past few years as larger firms have been acquiring smaller consulting practices. These firms have pursued acquisitions to expand client bases and develop their exposure to high-value and specialised consulting work, widening profit margins. Even so, small management consulting firms and sole proprietors continue to comprise most of the management consulting firms, serving niche markets and smaller clients. In recent years, a raft of new small firms and sole proprietors has contributed to growing enterprise numbers.
Industry performance is largely driven by consulting services’ diverse nature supporting management consultancies’ revenue, overall business confidence, public sector demand, firms benefiting from more clients adopting IT and telecommunications technology and major players consolidating via acquisition to build scale and broaden service offerings.
Legal Services
Legal services industry firms primarily provide legal advice and representation and prepare legal documents. Solicitors, barristers and legal aid offices typically provide these services. Alternative dispute resolution, conveyancing and intellectual property services are also included in the industry. The industry does not include services provided by in-house legal teams.
Legal service providers have faced mixed conditions over the past few years. Business confidence has been volatile over the period, prompting varied demand from downstream markets. Uncertain economic conditions have contributed to constrained demand for value-added services, like legal work relating to expansionary activity and IPOs as clients have sought to limit discretionary spending. On the flip side economic headwinds have boosted the need for restructuring and insolvency expertise. Constant legal requirements for downstream businesses have stabilised fluctuations in demand.
Larger firms have introduced more professional services to complement their legal work to maintain competitiveness with big accounting firms that are doing the same thing. The complexity of legal services designates a relatively high average profit margin for legal service providers. This figure is inflated by the large amount of sole proprietors in the industry that use profit as imputed wages. The continued need for core legal services despite economic uncertainty has benefited law firm profit margins.
Accounting Services
Accountancy firms provide accounting services, including auditing accounting records, preparing financial statements, preparing tax returns and bookkeeping. In conjunction with these services, industry companies may also offer business advice and assistance. The level of regulation in the accounting services industry is high. The industry requires close monitoring because of the importance of accurate financial reporting and ensuring appropriate measures are undertaken when compiling or auditing a company’s accounts.
Revenue in the industry has crept upwards in recent years, despite mixed operating conditions. Audit and tax services have remained a dependable source of revenue for accounting firms, as some businesses legally require these services. Nonetheless, swelling price competition has limited the profit margins associated with providing these services. Climbing demand for industry-specific advisory services has buoyed revenue in recent years, with many accounting firms expanding their advisory services.
Accounting firms are increasingly incorporating technology like data analytics and cloud-based accounting into their processes, which has expanded value-added services. These value-added services have larger profit margins than traditional tax and audit processing, encouraging firms to diversify.
Industry performance has recently been impacted by uncertain business conditions, with firms forces to cut costs to maintain profitability. Technological changes have had a mixed impact. Data analytics and technology consulting have been added to their offer and technological investments have added further income streams and allowed for productivity gains. On the flipside, client uptake of cloud-based accounting poses a threat to firms that provide traditional accounting services. Increased price-based competition continues to impact industry profit margins.
Scientific and Environmental Research Services
Scientific and environmental research services operators primarily provide scientific testing services to customers in the agricultural, mining, manufacturing and construction sectors. Industry firms also collect, analyse and forecast meteorological information. Other industry segments include pollution monitoring services, forensic sciences and general laboratory operations that may undertake testing for product safety and quality.
Key drivers for this industry include growing global demand within the mining sector, continued demand for scientific research services has also supported industry revenue, driven by investment in medical products, agriculture and chemical products, and IT and computing research. Farmers also continue to rely on trusted weather providers during volatile weather conditions. Consequently, profit margins continue to grow due to high demand an effective cost management.
Architectural and Surveying Services
Architectural industry firms provide architectural design and drafting services, landscape design services and town planning services. Industry operators also provide consultation on land zoning and building code regulations. Architectural services firms have endured challenging conditions in recent years. In response to uncertain economic conditions because of the pandemic and subsequent supply chain issues, many downstream clients delayed or cancelled projects, dropping demand for architectural services. Tumbling business confidence and construction activity have contributed to a limited number of new projects in recent years. This trend has intensified competition and put downward pressure on prices, further reducing architects’ ability to lift revenue. Nonetheless, climbing demand from institutional construction has buoyed industry revenue in recent times.
Architecture firms have faced mounting competition from vertically integrated firms, including large building construction and engineering consulting firms, in recent years. Some clients tend prefer firms that offer integrated services, as these operators can provide a full suite of services for projects at a lower price due to greater economies of scale. This trend has proven difficult for small architecture firms and sole proprietors, which make up the bulk of the industry. These smaller architecture firms often do not have the scale or brand recognition to acquire other firms or compete on tenders for substantial developments. Instead, larger integrated firms looking to expand their capabilities have increasingly acquired these boutique architecture firms in recent years.
Industry performance is driven by growing institutional building construction activity, which has benefitted large architecture firms. Inflationary pressures and interest hikes have stifled demand from a range of construction markets. Dwindling profit margins have forced some architects out of the industry. However, growing environmental awareness has encouraged a greater focus on green architecture.
Advertising and Market Research Services
Advertising industry companies provide clients with advertising services, such as creating advertising campaigns and materials. Industry revenue relates to the revenue received from developing and producing advertising campaigns rather than revenue from client billings.
The transition to digital advertising is underpinning growth for advertising agencies. Digital advertising services are surging at the expense of traditional print and broadcast advertising services. Many larger advertising firms are focusing on providing integrated services for clients. This is prompting a flurry of merger and acquisition activity.
The ways that advertising agencies implement strategies for clients to reach their audiences are changing. Mass media advertising’s high costs and the fragmentation of consumer media viewing habits are prompting some clients to expand their below-the-line advertising, like targeted email, SMS and direct mail campaigns. New forms of media, alongside changing media usage trends, are also affecting advertising agencies’ operating conditions.
Advertising firms are responding to these trends by transforming their traditional advertising strategies. Most major and middling advertising agencies are developing or acquiring complementary public relations, market research and analytics, digital advertising and web development businesses. Advertising agencies are expected to continue changing their services alongside ongoing media fragmentation over the coming years. Greater investment will be required to adjust to new mobile and online advertising trends.
