Over 50% of British organisations struggle with growth strategy

In the fast-paced world of professional services, businesses are facing the challenge of charting a clear course for consistent development in 2023. According to Deltek, a global provider of software and solutions for project-based enterprises, 53 per cent of British professional services organisations lack a defined growth strategy.

Deltek's fourth Annual EMEA and APAC Clarity Industry Study shed light on the trends and insights for architecture, engineering and consulting firms, revealing the pressing need for these organisations to prioritise their efforts while navigating various factors influencing their growth.

While concerns about the global economy and macroeconomic issues loom large in 2023, British organisations are equally worried about factors that directly impact their businesses. In a survey conducted by Deltek, 66 per cent of senior decision-makers cited a global or country-based recession and cyber security risks as their top concerns.

These anxieties are shaping the decision-making process of British businesses, causing them to lag behind their international competitors when it comes to anticipated profit generation.

Despite 65 per cent of British businesses expecting higher profits in 2023, their optimism falls short of organisations in the Nordic region (79%) and Australia and New Zealand (77%), which have set their sights on increasing revenues.

The unique worries of British businesses contribute to their cautious approach. British organisations are particularly concerned about rising supply chain and material prices, with 31 per cent expressing concern, compared to 16 per cent in the Nordics, 20 per cent in Germany and 20 per cent in Belgium.

A significant challenge for over half (53%) of project-based enterprises in Britain is the adoption of artificial intelligence, but only 39 per cent of those in Belgium have the same worries.

To counteract growth constraints, many British businesses are planning to ramp up their investment in new technology in 2023.

A staggering 76 per cent of organisations aim to increase their investments, with 29 per cent planning substantial increments. Among business leaders prioritising technology, artificial intelligence, robotic process automation, big data and data science emerge as crucial components for success, with percentages ranging from 41 to 45 per cent.

However, the path to integrating technology into professional services is not without obstacles. The implementation of emerging technologies is hindered by a lack of client education, the cost of technology, and insufficient personnel education, as reported by 51, 51 and 49 per cent of respondents, respectively.

Overcoming these hurdles is vital, as British organisations believe that failing to make significant progress in digital transformation will result in a loss of market share in under two years. In fact, a gloomy 36 per cent anticipate losing market share within a year, compared to only 17 per cent among their Nordic counterparts.

Interestingly, engineering firms express more significant concern about losing market share than architecture firms and consultants, with 64 per cent of engineering firms across industries fearing a decline within a year. This discrepancy highlights the diverse challenges faced by different sectors within the professional services landscape.

Britain's professional services sector leads Europe in digital transformation, with a substantial proportion (35%) of respondents considering themselves at an "advanced stage of the digital transformation journey."

This figure surpasses the corresponding number (19%) in BeNeLux, making Britain the region most invested in digital transformation.

Furthermore, compared to only 56 per cent of German businesses, over two-thirds (69%) of British businesses express confidence that they would complete the "Mature/Advanced stage" of their digital transformation in the next five years. A reported 93 per cent of professional services organisations in Britain think they are prepared to put their top digital transformation goals into action, with 42 per cent saying they are extremely prepared.

British businesses have ambitions to grow their staff by more than 10 per cent in the upcoming year, with one in six anticipating significant growth. However, difficulties with attracting and keeping talent (34%) as well as work-life balance (32%), have a detrimental impact on these goals.

In response, professional services companies are modifying their strategies to focus on personnel and attracting prospects in an increasingly competitive recruitment market. Employee mental health and well-being have gained significant importance, with 35 per cent of British organisations considering them more essential than ever before.

Differentiating themselves from their German counterparts, British organisations have a more defined and agreed-upon strategy for employee well-being and mental health programs (46% compared to 25%). Furthermore, 78 per cent of British organisations, compared to 61 per cent of German organisations, have Diversity, Equity and Inclusion (DE&I) initiatives in place.

Businesses are emphasising corporate social responsibility (CSR) and environmental, social, and governance (ESG) issues more in order to increase their ability to attract top personnel. A notable 27 per cent of British organisations believe CSR/ESG concerns have become substantially more essential compared to the beginning of 2022, with 54 per cent claiming they only intend to work with socially conscious businesses.

Furthermore, 54 per cent report that their clients exclusively use socially conscious suppliers, highlighting the significant impact of CSR/ESG practices on business relationships.

Monitoring progress remains a challenge for British organisations, with a lack of confidence in effectively disclosing project management metrics on schedule (54%) or on true cost (55%). Despite advancements in technology and skills, the majority (86%) of British organisations still manually enter financial data for their projects, and 35 per cent rely entirely on manual procedures.

While profitability, client satisfaction and average billing rates are closely monitored by British businesses, multipliers, estimates at completion and earned value management receive less attention. This selective monitoring approach underscores the industry's focus on specific key performance indicators.

Neil Davidson, Group Vice President of the Professional Services Sector at Deltek, highlights the encouraging trend of increased investment in technology for project-based firms in 2023. This investment aligns with the need for consultancies, architecture and engineering companies to maximise efficiencies and embrace innovative technologies that will drive sustainable growth.

Davidson also emphasises the growing importance placed on employee health, indicating that 2023 will be a pivotal year for professional services in fully embracing new working methods and capitalising on opportunities to optimise operations and teams.

Businesses in Britain are realising the need to hone their growth strategies and adjust to the needs of a constantly changing environment as the field of professional services continues to change.

These organisations are establishing the groundwork for a prosperous future by making technological investments, placing a high priority on employee well-being, and adopting CSR/ESG policies. The professional services sector in Britain is poised to take the lead in determining the course of the industry since they have their sights set on sustained growth and increased market share.