“There is nothing constant except change and this change is inevitable.”
The only thing constant throughout diverse industries is the ever-changing digital technology. Every industrial sector especially, Professional Services Industries are witnessing an emerging trend of innovative digital platforms. For various sectors like IT consulting firms, banking, finance, retail or even legal sectors, the challenging time is the increase in the use of new age digital freelance platforms and the cumulative use of Artificial Intelligence.
“Root cause of inequality is the mass scale digital disruption advantage as means of wealth creation is concentrated.”Ziad K. Abdelnour
The term ‘Digital Disruption’ is not only applicable to consumer-facing or asset-intensive industries, it implies to various other professional services industries. These days, most B2B industries come forward to implement digital technologies that transforms their business, from consumer engagement to operations to enterprise processes. They also feature prominent illustrations of digital disruptors making incumbents irrelevant in a short span of time.
B2B service industry segments, have traditionally always been labor-intensive (Consulting, Audit & Tax; IT & BPO Services; Multi-Services; Engineering & Technical services; Staffing, Temporary Labor). That makes them far less exposed to disruption. And yet, major change is happening in that industry, with newcomers prompting established players to reinvent the way they do business.
As digitalization and increasing competition witness markets across the world becoming susceptible to disruption, the services industries are often engaged by clients to best harness disruptive tendencies. However, the sector is no exception to this unpredictability and several factors are responsible in causing disruption in these industries.
One of the major contributor in triggering disruption in the service industries is globalization. The world has become smaller due to globalization leading to a surge in adoption of outsourcing. Organizations all over are leveraging technology to create models that provide value to customers at affordable rates. In a bid to tackle their shortage of human resources, some firms are resorting to using flexible work conditions and outsourcing the talents of independents for individual cases.
Customers now expect more value, higher quality of work, and a faster delivery of solutions and services. They are also asking for more transparency and accountability in work delivered. This leads to major competition in the digital world.
In today’s B2C sector, customer service functions have been extensively automated. Individual customers have the convenience of using applications and websites all on their fingertips. In comparison to that, the B2B services industries are still lagging.
Numerous professional service employees in the B2B sectors, assess their workforce structure as a hindrance to success in relation to the steadily extensive workload of these organizations. This requires a transformation in resourcing models. Due to the dearth of vital resources and skills required to deliver that work, many organizations had to turn down work.
In the Professional Services Industries, there a few glitches and obstacles currently that include the complexity and criticality of problems to be solved, as well as the perceived importance of a human connection. With further advancement of technology, the existing scenario would be modified immensely. But then again it is not possible for any product or customer experience be digitized with little or no negative impact on customer satisfaction.
Globally, most clients of consulting firms have a more practical understanding about assessing the jobs they need done, which is driving humongous transformation in professional services industries. The outdated mode of compensation to employees, wherein the number of hours performed by the employee were taken into consideration has become almost obsolete. In today’s current times, B2B clients are increasingly expected to pay for immediate outcomes. Consequently, many professional service industries have started outsourcing their workload as well as hiring freelancers for specific work projects.
The “industrialization of services” driven by technology enables providers to dramatically reduce costs and cycle times for their services. Technologies such as Machine Learning will likely impact services activities the same way as automation and robotics impacted manufacturing. Even though the extent of human labor involvement is not completely ruled out, it promises a scope of human labor replacement.
Along with cost optimization, digitization also permits new revenue streams as demonstrated by technology-based analytics and tools that consulting firms can embed at a client, providing ongoing engagement outside the traditional project-based model. Hence, digitization or automation aims at substantially undercutting the cost model of the traditional business.
To gain entry in Professional services industries is not that difficult as they have negligible barriers. In these industries, manpower is the foremost production input that make it possible to enter the market instantaneously.
Technology is altering the very nature of the business all over the world. That is the chief reason behind digital disruption in professional services industries. Irrespective of their sub-industry or scale, incumbents need to change as new competitors come in the market.
There is cut throat competition in the digital world, as technology is ever changing and reforming. With newer ground-breaking technology developments like Machine Learning, Big Date, Internet of Things (IoT), Artificial Intelligence (AI) posing a possible threat to professional services industries, most of the professional services firms are undergoing a major transformation. These new-age technology developments on the rise are gradually enabling the reinvention of older business models and traditional industry offerings.
The totality of these major trends mean that the professional services world is undergoing a period of the utmost important renovation. While customers are more demanding of speed, quality andagility from service providers, new, lean, digitally capable challengers are emerging in the sector and resourcing models are being disrupted. These compounding pressures are driving significant transformation, pushing professional services providers into a new era of services delivery.
Digital disruption has now become an unfortunate reality for Professional Services Industries globally. This segment is directly affected by competition from digital and data-savvy companies in the markets leading to a change that is inevitable. With data driven products and services or by collaborating with digital-savvy firms, many organizations in the professional services industries can fend off the disruption by becoming disruptors themselves.