Increasing customer expectations, competitive pressures likely to accelerate change in the sector
New research from Westpac NZ’s economic team has found that while firming economic activity should be good news for professional services over the coming year, the sector is likely to face significant disruption thereafter.
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Paul Clark, Westpac NZ Industry economist, said the professional services sector has easily outperformed the economy over recent years, despite a brief dip into the red due to COVID-19 lockdown restrictions.
“Looking forward, increasing customer expectations, rising competitive pressures and the ever-quickening pace of technology is likely to accelerate change in the sector,” Clark said. “Services will become increasingly automated and commoditised, and there is likely to be a much stronger emphasis on new innovative services that deliver extra value to the customer.”
Clark said winning professional services firms will be those “who know who their customers are, what their selling proposition is, and are able to align their operational capabilities accordingly.”
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“They will put the customer at the heart of their business and adopt new business models that increase their operational agility and responsiveness to changing demands,” Clark said. “We think that this will drive divergence in the sector. Large firms will provide services by leveraging off their own internal resources, occasionally dipping into external resources where necessary. Smaller firms are much more likely to operate an agile distributed model where resources are mostly externally sourced, and then combined internally to deliver customer value.”
Clark said Westpac also sees potential for convergence.
“Increasingly, professional services firms, irrespective of size, will move to network-based models where multidisciplinary teams hold end-to-end accountability for service delivery,” he said. “Firms that operate this model will leave those that continue to use old-fashioned silo-based hierarchical models in their wake.”
