New research commissioned by Unit4 analyzing the views of European professional services firms reveals a rise in demand for external skills to support digital transformation, whilst legacy IT systems and talent attrition hinder innovation in the industry.
The study: ‘Professional Services in Europe: A Benchmark for 2022’ conducted by research firm PAC analyzed the views of business leaders at 250 professional services firms across Europe operating in sectors including architecture, engineering, management consulting, IT services and financial services.
The study suggests significant optimism among professional services firms, which now see a rise in the demand for external skills to support digital transformation programs. 83 percent of business leaders surveyed expect revenue increases in their current fiscal year. Overall, 82 percent expect their number of accounts to increase with IT services firms (94 percent) and financial services organizations (87 percent) the most optimistic.
However, as the industry is one of the fastest consolidating in Europe, the need to smoothly integrate acquisitions is highlighted as an important success factor.
According to the research, legacy IT systems are hindering innovation, which could impact the ability for firms to capitalize on revenue opportunities. Significant issues have been raised about technology readiness, with 71 percent of business leaders viewing dependence on legacy applications and a lack of integration between key applications as a primary barrier to driving innovation. Moreover, 62 percent suggest a lack of insight into critical performance data is a blocker to innovation.
Firms are also searching for the right blend of resources to fulfil client needs, and there are growing concerns about workforce attrition. From a talent perspective, 60 percent of organizations reported an attrition rate of more than 10 percent, with 30 percent recording a level of more than 20 percent attrition.
Issues around utilization rates and project delivery were also identified in the research, with 19 percent of all respondents admitting they failed to reach the 70 percent mark for staff utilization, which is seen as the industry benchmark. This rose to 22 percent in the financial services sector. Equally there is a concerning 11 percent of projects not being delivered on time, which rises to 14 percent for architecture and engineering firms.
Nick Mayes, Research Director, PAC, said: “It could be tempting, as optimism returns to the professional services sector, that business leaders choose to avoid addressing the key issues raised in this study. It is more important than ever to have the right strategies in place to sustain growth and operate with the flexibility to adjust to what are still quite volatile market conditions. 2022 may not quite be a year of ‘consolidate or be consolidated’ but firms should be under no illusion that alongside growing opportunities market pressures are accelerating.”
Mark Gibbison, head of strategic motions for new business at Unit4, said: “Future success in the professional services industry will depend on how innovatively firms can respond to client demands. That requires an IT infrastructure built on agile foundations and designed to deliver a single source of information. Firms are also going to have to pay close attention to resource management to avoid talent attrition and maximize repeat revenue from existing customers.”