A new report from Deltek has found 53 per cent of UK professional services firms lacking a clear strategy for stable growth in 2023.
According to Deltek’s 4th Annual EMEA and APAC Clarity Industry Study: Trends and Insights for Architecture, Engineering and Consulting Firms, companies are wading through many considerations relating to growth and where to prioritise their focus in 2023. While macro issues are of concern during 2023, the report found that UK organisations are also highly concerned about issues directly impacting their business. Cyber-security risks/breaches were ranked equal to a global/country-based recession as the number one concern for the 549 senior decision makers questioned, with both being selected by 66 per cent of those surveyed. The lack of clarity in their growth plans puts UK firms behind their global counterparts in terms of predicted profit generation. While 65 per cent of UK organisations expect their profits to increase in 2023, they are less optimistic than other regions. Four-fifths of organisations in Nordics (79 per cent) or Australia & New Zealand (77 per cent) expect to raise profits. The research found that the UK is more likely than other European countries to be extremely concerned about increases in supply chain/materials costs (31 per cent in the UK vs. 16 per cent Nordics, 20 per cent Germany, 20 per cent BeNeLux). The adoption of AI was also seen as a major challenge by 53 per cent of the UK’s project-based businesses. Investment in tech Compared to their investments in 2022, 76 per cent of UK organisations plan to invest more in emerging technologies in 2023, including 29 per cent who said they’ll invest significantly more. At least two-fifths said the following are very important to the success of their organisation: big data (45 per cent), data science (43 per cent), artificial intelligence (41 per cent), and robotic process automation (41 per cent). The top three challenges to the adoption of emerging technologies are: a lack of client education (51 per cent), the cost of technology (51 per cent) and a lack of employee education (49 per cent). On average, UK organisations feel it would take 1.8 years to begin to lose market share if they failed to make significant progress in digital transformation. Over a third (36 per cent) of UK businesses felt they would lose share within a year. Across industries, engineering firms were the most worried, with 64 per cent concerned they would lose market share within a year, compared to 21 per cent architecture firms and 28 per cent of consultants. The UK is the most likely region to feel that they are currently at a Mature/Advanced stage of the digital transformation journey with more 35 per cent putting themselves in this category compared to 19 per cent in BeNeLux. Over two-thirds (69 per cent) of UK firms said they are confident they will be in the Mature/Advanced stage of digital transformation in five years’ time, compared to 56 per cent in Germany. Further, 93 per cent UK professional services firms feel they are well-prepared to implement their top priorities for digital transformation, including 42 per cent saying they feel very well-prepared. Attracting talent Almost two-thirds of those surveyed in the UK said their organisation is planning to increase the size of its workforce during 2023, including 16 per cent saying it will significantly (>10 per cent) increase. However, a third admit that difficulty in attracting and retaining talent (34 per cent) or a lack of work/life balance (32 per cent), are detrimentally affecting their firm. Consequently, professional services firms are adjusting their policies to focus on employees and attracting candidates. 73 per cent of UK organisations said they place more importance on employees’ mental health/well-being now than they did at the start of 2022, including over 35 per cent who feel it is significantly more important. In a statement, Michael Ibbeson, principal and CEO, Structa LLP said, “Finding talent is always hard, but we find when we are meeting people that if we can convince them that we are a well-organized, well-managed business that goes a long way to them choosing Structa as their employer.” Firms are also focusing on CSR/ESG issues, with 72 per cent of UK organisations saying they place more importance on CSR/ESG issues now than they did at the start of 2022. Neil Davidson, group vice president, professional services sector at Deltek, said: “The focus on investment in technology in 2023 is particularly encouraging for project-based businesses. As we move into an era of accelerated innovation, it is smart investments in the tools that will help consultancies, architecture and engineering firms optimise their efficiencies that will give them the small and large gains needed to continue growth. This, coupled with an increased focus on employee wellbeing, suggests 2023 is a key turning point for Professional Services in truly adjusting to the new ways of working and seizing the opportunities available to make their operations and teams work at peak efficiency.”
