Top 3 trends forcing professional services companies to change their Business Model

Paul Smitherman |

Digital Technology has been revolutionising the way businesses operate, driving new business models, increasing productivity and delivering better customer service. Professional Services organisations have helped many organisations to leverage the advantages of this digital transformation. These changes are now set to transform the way they deliver their own services. Digital delivery of services, outcomes-based pricing and the virtual workforce are driving a seismic shift in the industry.

“To thrive in a digital world new business models will need to embrace these changes”

1/ Digital Delivery


Technological innovations are changing the way businesses operate and are set to transform the way Professional Services firms deliver their services.

On-line collaboration is moving service delivery from face-to-face interactions to internet-enabled platforms. The life cycle of project delivery, from Marketing, Bid Management, and Resource Management through to Profitability and Billing, is being managed on-line and in real-time. The cloud solutions that have brought benefits to their clients are now being deployed by providers to transform their service delivery.

Artificial Intelligence (AI) technology is making specialist expertise available through natural language interfaces, replacing face-to-face engagements. Shifting services that can be offered through AI will free up expert resources to deliver transformational innovation to clients.

Over time Professional Services firms build up considerable knowledge and expertise, but up to now this has only been available to clients as part of a formal engagement. Digital innovations are providing the platforms on which these assets can be monetised, and the leading firms will seek ways to offer these services digitally via subscription-based packages.

These changes will disrupt the traditional profitability model of billable hours less costs. Up to now firms have had to grow permanent headcount to increase revenue linearly. The changes in service delivery provide opportunities for non-linear growth.

Cloud solutions

Entering this market requires skills to develop, support and continuously improve offerings in order to grow revenue.

“Cloud solutions, containing the required data, AI algorithms, and easily accessible user interfaces will be key to success.”

2/ Outcome-based Pricing

Customers are increasingly focused on desired business outcomes rather than the effort associated with the delivery, driving new contract structures and relationships with providers. This model transfers much of the risk from the client to the Professional Service provider and challenges include preparing accurate bids that enable both parties to monitor delivery and measure success. Repeatability is the key to defining profitable proposals, based on previous performance and results.

These innovations extend through the full life of an engagement, allowing managers to monitor costs in real-time, and flex resources to keep delivery on track and within budget. Close collaboration between provider and client can be enabled via digital platforms, allowing blended client/provider teams to work together more effectively.

Contracts will define the outcomes expected by the client, with less detail on how the end result will be achieved. This shift will need new skills to define measurable outcomes that can be assessed both during and at the end of an engagement.

“Project Managers will need new tools to monitor performance and profitability in real-time to ensure customer expectations are met within budget.”

3/ Virtual Workforce

Time and materials business models rely on expanding the workforce to grow the business. In the developing technological environment opportunities are emerging for Professional Services companies to flex their resources to meet project demands. The talent market is increasingly digitised, enabling organisations to identify and attract specialist talent and deploy them on client engagements for specific tasks. Teams can be flexed as needed. The traditional staff pyramid will increasing be replaced with a bespoke talent profile of contingent workers for each engagement.

Powerful collaboration platforms are available to enable the virtual workforce to operate as coherent virtual teams and to deliver services as and when they are required. Talent may be accessible on the open market through talent platforms, or through partnerships with specialist organisations.

Workforce Management Systems are becoming more sophisticated, with outdated spreadsheet-based resource allocation being replaced by real-time sourcing and monitoring systems that allow effective management of virtual teams across employees and external resources.

New entrants to the market are arriving “digital-ready”

Professional Services Companies will need to embrace these changes to compete