Some thoughts on trends in Professional Services

It's been an "interesting" period in the industry over the past few years. The traditional boundaries in the provision of professional services have become somewhat blurred as changes have been driven both by the profession itself, and the demands from clients. This looks set to continue.

Professional Services firms want to increase their range of client services, both to enter new markets, and to expand their scope of services to their traditional clients. Clients want their relationships with professional services firms to offer more value, and be more joined up with their overall business goals.

Some of these changes began quite some time back. The 'Big Four' largest global accounting firms: Deloitte, EY, PwC, and KPMG provide auditing services, tax, strategy and management consulting, valuation, market research, assurance, and legal advisory services. Their consulting services overlap considerably with the "Big Three" of strategy consulting: Bain & Company, Boston Consulting Group (BCG), and McKinsey & Company. And there's overlap with the legal profession too, since lawyers and accountants have always competed, particularly in the area of tax. Add to that the trend in delivering strategy execution not just strategy advice, and we now see many of these firms delivering projects, not just PowerPoint strategy decks for their clients, and overlapping with a wider range of transformation delivery professional services firms including IBM, Capgemini, Accenture, TCS, Infosys, Cognizant, and HCL to name just a top few.

All of these huge global companies offer overlapping services, competing for share of client spend, and for talent. They compete with each other, and they partner with each other, and they buy services from one another. This isn't even all of professional services, you can easily add recruitment and property management into the same broad church.

But it's the rise of AI that's having the most contemporary effect, coming as it does on top of longer-term trends affecting these businesses, related to an increasingly globalised labour marketplace, and the hiring shifts driven by the pandemic. In short, do all these huge companies have the right number of skilled people, in the right locations and at the right global cost rates, with the right mix seniority and industry expertise, to match client demand?

AI is bringing multiple competing pressures, to these companies themselves, to their workforces and talent pools, and to their global clients. Clients want expert consulting on AI. They need help to understand what it can do, what it will do to their industry, and how they can use it. They also expect Professional Services firms to be using AI to deliver some of their services, and thus making those services cheaper, while firms want to increase margin, using AI to make work more efficient.

But challenge comes as much of the work most amenable to AI automation in this 'first wave' is the early professional tasks where new talent 'cuts their teeth'. It seems most likely that AI will start cannabalising low/entry level jobs first. If there's less entry-level graduate work, and fewer graduates are hired, where does the senior talent of the future come from?

While it might be use-cases like customer service where AI is already showing real promise, the creative industries, and it now looks increasingly like the professional services industries too, will soon see growing shifts as well. Can AI replace junior legal professionals reviewing contracts, can it replace junior analysts doing audit work, how much of a junior management consultant's role will be similarly impacted?

Some hiring impact is already being seen [https://www.dhirubhai.net/news/story/ai-impacting-uk-grad-jobs-6207108/], and the change is also seen in the hiring process itself. Pressure is mounting on students who now submit 50+ applications vs the 24 average pre-AI, often relying on AI to write cover letters. AI tools help students apply quickly, and as AI increases the number of applications a graduate can make, that means organisations swamped with applicants, many irrelevant, and issue more rejections. Employers are using AI to process applications faster after receiving an overwhelming 140 applications per vacancy in 2024 up 59% from last year. This has the hallmarks of creating a vicious circle.

Numbers aside, I'm particularly struck by the mention of quality and relevance in job applications - something that's also being discussed in the creative industries. I personally don't want to read an email or a blog post written by an AI (not yet at least, I'm sure I'll get used to it). What's the point? Do we want a world where nobody writes anything (AI does), and nobody reads anything (they get their AI to 'summarise' it for them), where is the value being created (except for the AI firms themselves obviously)? And if we're talking quality and value, if the work is done by an AI, what is a client going to be willing to pay for it? As traditional Professional Services hourly billing models were already coming under pressure from value-based pricing models for human work, now enters the new contender: how does one price work done by an AI?

A quote attributed to many people, from the Nobel prize-winning Quantum physicist Niels Bohr to legendary baseball player (and philosopher) Yogi Berra states: "It is difficult to make predictions, especially about the future."

We can be certain that AI will have a profound impact on Professional Services work, but it's not entirely clear how all of the ramifications will play out.