Professional services firms too need digital transformation

Professional services rely on human capital

Professional Services (PS) firms rely on human capital in two ways. First, there is the expertise and experience embodied in the firm’s human resources (partners, managers, consultants, and others). Depending on the firm’s specialization, these span fields such as accounting, law, business/ technology consulting etc. Such capital is explicitly available “on tap”, and plays a critical role in identifying and understanding client needs, closing deals, building relationships, and supervising engagements. Second, but just as important, is the implicit knowledge capital in the form of industry-specific or client-specific data, insights, templates, proposals, reports, and best practices drawn from earlier projects. These assets typically reside in the firm’s repositories and are used by teams doing similar work for other clients or when pitching to prospects/clients.

Collectively, these assets contribute to a PS firm’s ability to:

• Submit credible and persuasive proposals that articulate a robust approach and delivery methodology and demonstrate domain knowledge, track record, technical capabilities, and innovative thinking; and
• Reduce effort/elapsed time during execution of the engagement by leveraging relevant data/insights from earlier work, which translates into higher revenues/margins

PS firms are caught in a pincer grip that can erode brand image and market share

Revenue streams for most PS firms are tied to the time/effort their staff spend on individual client matters. There are, of course, exceptions such as “success fees” linked to outcomes of M&A advisory services or outcome-based fees for consulting firms. In recent years, PS firms have been facing a major challenge on the talent front, and this is akin to a pincer because it impacts both attraction and retention of talent as well as client expectations.

Experienced partners and employees are turning entrepreneurs or leaving to pursue their passions outside of professional work. GenZers and millennials, inherently digital natives, now form the bulk of the workforce at the junior levels. Given what they are used to outside work (e.g., apps that provide speedy and convenient access to information and the ability to transact instantly), this segment is expressing a preference for workplaces that use digital technologies to enhance efficiency and collaboration. They view traditional workflows and processes as grunt work that ought to be done more easily and efficiently through automation, and are not keen on working with PS firms that are not adequately tech-savvy.

Therefore, for PS firms, moving more and more workflows to digital platforms has become an imperative. Also, the emergence of hybrid workplaces means that knowledge workers no longer need to work from a designated workspace if they are enabled to work remotely without compromising security of information, productivity, or ease of collaboration with other internal/external stakeholders. New hires can be onboarded largely through all-digital channels instead of requiring them to visit a designated office.

If attracting/retaining talent represents one arm of the pincer, shifts in client needs and expectations is the other. In fields such as consulting, audit, tax and regulatory compliance, clients are now less willing to pay PS firms based only on “time cost”. As a colleague quipped only half in jest, “Clients expect PS firms to provide Business outcomes as a Service”. This shift is driven by the client organization’s need to reduce costs and the recognition that traditional ways of working by many PS firms inherently consume more time (that is ultimately billed to the client).

Harnessing emerging technologies in new, imaginative ways can help make PS firms more attractive to both talent and clients- and thus escape the pincer. This means looking at digital transformation as more than just an opportunity to automate tasks that are high on manual effort. These “digital stakes in the ground” can help PS firms become a rule-setter and game-changer, and thus gain tangible competitive advantage by leapfrogging competitors.

Digitalization can benefit PS firms in many ways

PS firms can leverage the transformative power of digital technologies and the innovative capabilities of their business-technology partners to sharpen their competitive edge and build a moat of differentiation from rivals. Here are some examples, with the caveat that these are illustrative; each one will not apply to every PS firm.

Managing employee journeys/experiences

Many PS firms still use disparate systems to support various functions/processes such as onboarding new hires, timesheets, skill development, performance management etc. It is now possible to have one app that can address all these diverse needs across an employee’s association with a firm- from hiring to exit, as it were. When banking, shopping and entertainment are possible “on the go”, why not work-related administrative processes or even client-facing interactions, for that matter?

Collaborating more effectively and efficiently

With team members working from different locations, firms need to enable secure information exchange, including review of analyses, documents, deliverables etc. Some interactions may be via email, while others may be via voice calls or interactions via integrated platforms that allow “digital whiteboarding”, “breakout sessions”, and sharing information (including what’s on the whiteboard) with some/all participants. Such platforms can be integrated with the firm’s knowledge management systems to enable voice-based searches to quickly locate emails and other assets. Such capabilities enhance the PS firm’s credibility, besides saving time.

Training & skill enhancement

The nature of the work done by PS firms requires employees to keep abreast of the latest concepts, techniques, regulations, methodologies etc. App-based personalization of content and learning experiences is another way of engaging next-generation employees while enhancing learning effectiveness and tracking progress. This allows Individuals to access learning materials that are more tuned to their preferred learning style (auditory, visual, experiential etc.). Integration with the firm’s skills repository will reduce the need for employees to separately update their training details, a task that is prone to procrastination.

Proposal writing

While every proposal is customized to the client’s context and needs, many sections are standardized. However, templates change over time due to changes to the brand standards or regulatory requirements. Relying on individuals using the right template can be inefficient simply because most people reuse old documents in their laptops or are accessible from old emails. An app designed to make proposal writing easier by integrating different elements can make it easier to “push” the right template, case studies etc. This is a major time-saver for new hires unfamiliar with the firm’s knowledge repositories. It also ensures better compliance with brand guidelines and reduces non-value effort.

AI/ML and voice-based searches can speed up the process of searching for old proposals and reports, so that scope of work can be properly defined, robust effort estimates are arrived at, and risks can be identified and mitigated at the proposal stage itself.

Project tracking & allocating resources

PS firms need to be more mindful of employee stress levels. One way of doing this is to give them enough heads-up to prepare for their next assignment so that they get enough R&R time. Delays in filling time-sheets and unexpected leave plans can impact staff availability, forcing firms to make last-minute changes to people allocated for client work or non-billable work. Sometimes, such decisions may need more expensive resources need to be deployed in the interest of timely completion of work, thereby impacting profitability of projects.

Firms can use AI/ML technologies to optimize allocation of people across locations, client projects (and non-billable work) as well as to track and manage profitability at the level of individual projects and clients. System-triggered alerts can enable proactive internal and/or client reviews so that corrective measures can be taken to avoid time/cost overruns.

Managing contracts

Depending on the PS firm and client, contractual obligations may be spread over MSAs, SOWs, Change Requests etc. Accessing a central firm-wide repository can make it easier for large, multi-location firms (including global ones) to manage their legal documentation effectively. Such a system can also make it easier to allow country-specific changes to clauses (e.g., to comply with local laws).

Enabling new revenue models

As PS firms look to grow revenues and increase client stickiness, it is possible to offer certain services to clients as subscriptions or pay-per-use. Regulatory compliance is an example of this. A consulting or law firm develops a compliance engine that is on the cloud and gives individual clients access. The scope of compliance services can be scaled up/down based on client needs. Such a model can enable firms to service a larger number of clients without adding to headcount.

Enhancing client experience

PS firms can use technologies such as AR/VR/Metaverse to showcase “future state” possibilities to clients. They can be used for journey orchestration to deliver richer, more personalized experiences. This may be more relevant to certain types of PS firms (e.g., advertising, event management etc.).

Want to learn more?

If you run a PS firm and are looking for ways to leverage technology to help you drive profitable growth more sustainably, I’d love to have a conversation with you. Write to me at Kumar Paramasivam ([email protected]) to start the process.

Infosys is a global leader in next-generation digital services and consulting. Over 300,000 of our people work to amplify human potential and create the next opportunity for people, businesses and communities. With over four decades of experience in managing the systems and workings of global enterprises, we expertly steer clients, in more than 50 countries, as they navigate their digital transformation powered by the cloud. We enable them with an AI-powered core, empower the business with agile digital at scale and drive continuous improvement with always-on learning through the transfer of digital skills, expertise, and ideas from our innovation ecosystem. We are deeply committed to being a well-governed, environmentally sustainable organization where diverse talent thrives in an inclusive workplace.