The Evolution of Professional Services

TRENDS SHAPING THE FUTURE OF PROFESSIONAL SERVICES ORGANIZATIONS

Analyst perspective

Professional Services is in a state of evolution.

The professional services industry stands at a pivotal crossroads where unprecedented challenges and opportunities are driven by technological advancements and shifting client expectations. Professional services firms everywhere must recognize that the traditional paradigms that have long defined the industry are evolving. The business model of specialized knowledge and labor-intensive tasks as a primary value driver is no longer viable.

The status quo is giving way to a new era where technology and human expertise intertwine to deliver new value that meets broader needs and can ultimately be scaled for a larger base of clients who need affordable professional services. Providers need to reimagine delivery models that range from low-cost self-service options to high-value strategic advisory services.

The future belongs to professionals who can balance the integration of cutting-edge tools with the value of human insight and strategic thinking. It’s important to remember that the professional will always be core to the value proposition; the current evolution of the industry is not about replacing professionals but about augmenting their capabilities to deliver more value, faster and more efficiently than ever before.

Justin St-Maurice, PhD
Principal Research Director, Professional Services Industry
Info-Tech Research Group

Executive summary

Your Challenge

Keeping up with the constant state of change in the industry is difficult due to the overwhelming number of unprecedented technological changes and disruptions.

You need to master internal IT capabilities while also productizing services and emerging intellectual property.

Customers’ expectations grow at the pace of technological change, as does the number of competitors vying to earn existing accounts.

There are evolving factors transforming digital business models that need to be addressed using emerging and rapidly changing technologies.

Common Obstacles

You need to turn IT into a source of business opportunities. Delivering high-quality service is not part of a corporate cost center but a central profit generator.

You need to think ahead. Understanding and predicting the impacts of trends is your bread and butter, but you need to balance uncertainty with opportunity.

You need to innovate your business model. Core business delivery, customer relationships, and strategic partnerships are as crucial to success as technology innovation.

Info-Tech’s Approach

Review the results of a broader scan to highlight the demonstrated and relevant trends in Professional Services.

Understand the trends to navigate the opportunities and challenges of tomorrow.

Highlight the impacts of the trends on professional services organizations and their customers.

Leverage Info-Tech research to launch next steps and take concrete actions.

Info-Tech Insight

The future belongs to professionals who can balance the integration of cutting-edge tools with the value of human insight and strategic thinking. It’s important to remember that the professional will always be the core of the value proposition; the current evolution of the industry is not about replacing professionals but about augmenting their capabilities to deliver more value – faster and more efficiently than ever before.

The evolution of Professional Services

The Past

Professional Services involved gatekeeping specialized information and processes, as firms acted as essential intermediaries between clients and complex regulatory systems.

Accountants were occupied with bookkeeping, manual ledger entries, and complex tax calculations. They spent significant time preparing financial statements, conducting audits through paper trails, and providing tax advice based on evolving tax codes.

Engineers played a role in the onsite supervision and management of complex projects while focusing on important details and calculations to draft technical drawings and structural plans.

Lawyers spent time manually drafting, reviewing, and researching material in extensive law libraries and served as intermediaries for various legal processes, such as filing paperwork and representing clients in court proceedings.

The Present

Professional Services is going through a digital revolution. Cloud computing, AI, and data services are transforming how firms operate using automation, process improvement methodologies, and personality data insights.

Client expectations are driving a shift toward more value-driven and transparent services. Clients expect faster service delivery, competitive pricing, and insights that go beyond traditional offerings. They also have growing access to alternative tools and services.

The regulatory landscape is getting more complex. Law firms are adapting to new data protection regulations and evolving ethical guidelines for AI. Engineering firms are facing stricter environmental regulations and sustainability requirements. Accounting firms are dealing with changing tax laws, geopolitics, and multifaceted reporting standards.

Global challenges create new opportunities and risks. Climate change and cybersecurity threats create new service areas and specializations within the professional services industry.

The Future

AI will require professionals to further emphasize high-value strategic work. Combining low-cost self-service options with high-value professional advice will involve managing a spectrum of service levels and business models to be profitable and competitive.

The lines between traditional professional services and technology providers will blur. As technology becomes increasingly central to service delivery, professional services firms will evolve into hybrid organizations that blend professional expertise with advanced technological capabilities.

Continuous learning and adaptability will become crucial. The rapid pace of technological change and evolving client needs will necessitate a culture of continuous learning and innovation.

Firms will need to cultivate a more agile and flexible organizational structure to quickly adapt to market shifts and disruptive innovations. Balancing change management, innovation, and compliance will be an ongoing challenge that grows more complex over time.

Interconnected challenges define the future of professional services organizations

External-Facing Challenges

Disruptions to the status quo need to be understood as opportunities. Adapting to changing regulatory requirements, client expectations, and technological innovation is a means to reinvent and adapt business models and client experiences.

Internal-Facing Challenges

Professional services organizations need to invest effort and time in reimagining internal processes and operations. Balancing change, optimization, and innovation in a functional equilibrium will require fresh thinking and updated management acumen.

Transformative trends are impacting professional services everywhere

Workforce and Demographic Changes

• Skill shortages and generational differences
• The growing need for AI literacy
• Shifting attitudes toward work-life balance
• Competitive recruitment for specialized expertise
• The rise of remote/hybrid work preferences

AI and Technological Disruption

• Automated document review and due diligence
• Widespread adoption of generative AI for routine tasks
• Proliferation of tech startups and solutions
• Integration challenges with legacy systems
• Rising cybersecurity threats

Client-Centric Services and Alternative Pricing

• Expectations for quicker turnaround and transparency
• Value-based billing replacing traditional hourly models
• Real-time status tracking and communication
• Using collaboration platforms to enhance client engagement
• Personalized solutions driven by analytics

Evolving Regulatory and Compliance Requirements

• Complex cross-border M&A regulations
• Evolving data privacy and cybersecurity frameworks
• Professional associations issuing new guidelines for AI usage
• The expansion of professional standards beyond local jurisdictions
• Greater regulatory scrutiny of firm ownership/structures

Evolve your professional services organization

CHANGE MANAGEMENT

Professional services organizations need to master change management to stay in the game.

Professional services organizations need to align with rapidly evolving client expectations and leverage new technologies. Firms that successfully manage change will maintain their competitive edge, while those that resist may become obsolete.

PROCESS OPTIMIZATION

Technology is driving operational efficiencies and competitive advantage in the delivery of services.

Automating administrative tasks allows professionals to focus on high-value work to enhance client satisfaction and profitability. By streamlining operations and optimizing processes, firms reduce costs and improve service delivery.

INNOVATION GOVERNANCE

It’s time to balance innovation and compliance through an effective governance program.

Professional services organizations must innovate within increasingly complex compliance frameworks. Firms that manage to stay ahead of the curve while mitigating risks maintain trust and avoid regulatory enforcement.

NEW PRODUCT DELIVERY

Market innovation is changing business models and creating an ecosystem of new services and products.

Professional services organizations need to develop novel offerings that blend traditional expertise with cutting-edge technology. This opens new revenue streams and positions firms as forward-thinking leaders that can attract new clients.

“Many potential disrupters have come along. Some have failed, some have gained strong niche positions, but none has challenged — let alone toppled — the existing order.” (Source: MIT Sloan, 2023)

TREND REPORT IN CONTEXT

Combine this trend report with Info-Tech’s reference architectures and exemplars to develop your strategy

• The Evolution of Professional Services – Client advisory deck
• Professional Services Business Reference Architecture Guide – Blueprint

Business Context & IT Strategy

• Digital Strategy
• IT Strategy


• Tech-Enabled Business Strategy for Professional Services – Strategy exemplar

Change Management

TREND 1

Dealing with rapid change associated with shifting expectations and new technology is a common challenge. What does it mean for professional services organizations?

Professional services firms need robust change management capabilities to stay competitive

Competitive pressure is a big driver of the need to change and evolve (WalkMe, 2024). Compounding factors are pushing professional services organizations out of their comfort zones, such as rapid technological change and evolving workplace demographics. Firms must view investments in technology as a pivotal part of the business rather than an unpleasant expense (RSM US LLP, 2023).

Managing transformational change effectively is the difference between a successful transformation and being stuck in the status quo. However, only 43% of employees say their organization is good at change management, and only 25% of organizations have employees saying that managing change is a strength of senior leaders (WTW, 2023). This is further complicated by the view that technological change can expose generational gaps in the workplace (Capterra, 2024), making change more nuanced and complex.

Merger and acquisition activity is also increasing, another source of change in the industry. Specifically, legal firms see mergers and acquisitions as a means to future-proof stability and profits during rapid change. “83% of top law firms think a merger is likely in the next two or three years” (Adamson & Partners).

5% of respondents said their organizations have the right capabilities to integrate technology into their strategy. (Source: McKinsey & Company, 2023)

Nearly four in five respondents believe adapting the enterprise to competitive forces needs to happen every two to five years. (Source: WalkMe, 2024)

“Younger talent doesn’t want to put in 3,000 hours of work a year, always from an office and with no opportunity for a real vacation. Appealing to them may mean breaking away from years of tradition and providing alternate paths.” (Source: RSM US LLP, 2023)

INNOVATION AND GENERATIONAL CHANGE WILL CONTINUE TO IMPACT PROFESSIONAL SERVICES FIRMS

• 2 in 3 professional services organizations predict AI will have a high impact on service delivery. (Source: Thomson Reuters, 2024)
• 84% of professional services organizations think the millennial generation moving into leadership roles will have an impact on service delivery. (Source: Thomson Reuters, 2024)

Signals

WHAT WE ARE SEEING | Change is happening on multiple fronts.

Technology change will increase, with 63% of organizations planning to increase their automation efforts by 2026 (Accenture, 2024). Nearly one quarter of professional services workers said they were already using generative AI (Gen AI) or actively planned to start using it (Thompson Reuters, 2024).

Nonuniform, intergenerational workforces complicate change management. More than half of Gen X workers resist new technology adoption, while 72% of Gen Z workers show no resistance (Thompson Reuters, 2024). More than half of baby boomer employees say getting used to new technology is a challenge at work, compared to only 30% of Gen Z employees (Business Wire, 2024).

Change associated with mergers and acquisitions in legal firms has grown by 25% in the last year (IDEX, 2023). 62% of respondents are considering new practice areas, and 55% are looking at new geographies (Adamson & Partners).

TYPES OF ORGANIZATIONAL CHANGE

• Technological Change

  • Adoption of new technologies
  • Digital transformation initiatives
  • Automation of processes

• Structural Change

  • Mergers and acquisitions
  • Reorganizations
  • Expansion into new practice areas

• People-Centric Change

  • Workforce demographic shifts
  • Intergenerational dynamics
  • Skill development and reskilling

• Strategic Change

  • Shifts in business models
  • Market repositioning
  • New product or service offerings

Drivers

WHY YOU SHOULD CARE

• It’s time to develop your change management team’s capabilities. Job growth (and competitive hiring) in change management is expected to grow 14% faster than the average profession (Kantata, 2023).
• You need to plan your changes thoughtfully. Only 43% of employees with high change fatigue intend to stay with their organization, compared to 74% with low fatigue levels (Capterra, 2022).
• You need to develop trust and engagement as part change. 37% of employees feel less trust toward their employers after experiencing workplace changes (Capterra, 2022).

Understand change management in context

Change management is a key enabling capability that supports many other shared capabilities. It is needed to successfully assess risk during innovation, change processes to capture better data, monitor compliance, and automate.

Review Info-Tech’s Business Reference Architecture Guide for Professional Services for examples on how to incorporate change management as an enabling capability in your business capability map.

Professional Services Guide
Professional Service Template

Understand the opportunities and challenges

Opportunities

• Project Delivery
• Revenue Growth
• Technology

Change management excellence has a positive impact on project delivery and can reduce overruns. Projects with expert change management are 50% more likely to stay on or under budget (Prosci, 2024). Good change management practices reduce costs.

Effective change capabilities can be a significant competitive advantage. Organizations that are successful at managing large-scale organizational change during times of business transformation see 264% more revenue growth compared to companies with below-average change effectiveness (WTW, 2023).

Integrating new technologies via change management boosts operational efficiency. A higher rate of technology adoption occurs when a human-centered change management approach is used, resulting in improved returns on investment (ROI) for the organization (Surety Systems, 2024).

Challenges

• Data Quality
• Skill Gaps
• Change Latency

Data quality impacts decision-making and change. Only 23.8% of decision-makers have full trust in their current data, indicating that poor data quality impacts decision-making across all operational areas (Intelligent CIO, 2024). Change management is more difficult with poor data.

Technical literacy and skills confound challenges. Nearly a third of lawyers (36%) say they don’t have sufficient skills, knowledge, or understanding of legal technology to be effective (Wolters Kluwer, 2023).

Change takes time to realize, and organizations are often tempted to introduce additional changes before they’ve realized the benefits of the first change. “One third of workers say they’ve experienced four or more significant changes at work in the last year, including to their team structures and daily job responsibilities” (PwC, 2024). This makes changes hard to measure and properly attribute, while also cross-multiplying negative impacts.

CASE STUDY

Adobe: Navigating technology change

The Challenge

Adobe faced significant challenges in 2011 due to increasing competition and technological advancements. The company needed to transition from selling licensed software in physical formats to offering cloud-based digital services, which required a complete revamp of its HR practices and overall organizational culture. This shift was necessary to align with the company's new strategic vision.

The transformation demanded a fundamental change in how Adobe managed its workforce, requiring a move away from traditional HR practices toward a more innovative and employee-centric approach.

The Solution

Adobe needed to foster a culture of growth and adaptability to support the strategic shift.

• Emphasized engagement and continuous feedback to enable a culture of growth and adaptability
• Implemented a new performance management system called “check-in”
• Introduced frequent, informal conversations between managers and employees
• Developed new leadership competencies aligned with the company's strategic goals
• Created a more flexible and innovative HR approach to support the organizational transformation

The Results

Adobe successfully navigated technological changes to align its operations with its strategy.

The transformation of Adobe's HR functions led to a significant increase in employee retention.

The shift to a more flexible, innovative HR approach not only aligned with the company's strategic goals but also fostered a culture of continuous improvement and personal growth among employees.

These changes contributed to Adobe's successful transition to cloud-based services, improving its competitiveness in the rapidly evolving software industry.

(Source: Invensis Learning)

Why is change management important for professional services organization leaders?

IT Leaders

Effective change management has a positive impact on project delivery and builds credibility and trust. Change management is a soft skill that helps mitigate disruptions caused by the human factor of rapid technology adoption and evolving workplace dynamics.

Resistance to technology adoption requires tailored approaches to training and onboarding. IT leaders need to understand their audience and include flexible learning methods and collaboration across age groups to support change. Reduce friction and improve cross-functional alignment during technology implementations.

The opportunity (or threat) of mergers and acquisitions amplifies the need for mature systems and processes. IT leaders must act as integrators and be ready to scale their integration capabilities to ensure there is an ongoing strategy to merge technology platforms. This requires foresight in planning and ongoing support to maintain system stability before, during, and after transitions.

Changing the department’s operator mindset is challenging but needed to help bring technology expertise to the most important strategic conversations about the organization’s future. Proactively address the complexity of transformational change from a technical, process, and human perspective. Promote technology investments as strategic rather than utility-based and align innovation efforts with broader business goals.

Business Leaders

Change management is a key business capability that is critical to maintaining competitiveness in a fast-changing market. Business leaders must prioritize and champion the ability to change effectively. There is a catch, though: too many knee-jerk changes are merely reactions and have negative impacts on morale and productivity. Failure to manage change properly undermines stability and profit potential.

Generational dynamics complicate organizational change efforts. Business leaders need to promote a culture of inclusivity and adaptability to bridge the gap between resistant Gen X employees and tech-forward Gen Z workers. This challenge needs to be managed with intention and seriousness to foster a unified workforce with broad capabilities.

The possibility of merger-driven changes necessitates change management capabilities as a means to retain your organization’s value. Prioritize clear communication of goals and values, build trust, and maintain productivity with an empowered workforce that remains committed to your mission.

Include technology leaders in conversations about strategic change. Technology is likely impacted, or needed, for successful change. Advocate for technology adoption as a critical enabler of efficiency and growth and promote the value of technology investments that reduce the risk of falling behind competitors.

From priorities to action

• Conduct a change readiness assessment. Evaluate your organization's current readiness for change by assessing factors like leadership alignment, employee sentiment, and existing change management processes.
• Develop a change management playbook. Create a standardized framework for managing change, including templates, communication plans, and defined roles and responsibilities.
• Train leaders and managers as change agents. Offer training programs to equip leaders with the skills to advocate for change and manage resistance effectively.
• Leverage technology for change enablement. Use digital tools to streamline communication, monitor progress, and gather feedback on change initiatives.
• Create metrics and feedback loops. Define measurable KPIs for change success (e.g. adoption rates, project timelines, employee satisfaction) and regularly review progress.

Break changes into digestible components to make them manageable. Organizational change management does not need to be complex. Set short-term goals to go through the change process smoothly and achieve success.

Drive Adoption and Sustain Transformational Change

Create a unified change management process that reduces risk. The process should be balanced in its approach toward deploying changes while also maintaining throughput of innovation and enhancements.

Optimize IT Change Management

Change your perspective on organizational change management. Understand the change management process for transformations, the main challenges faced during a transformation, and the key factors to succeed and realize the intended value.

Crack the Code to Successful Transformation Management

Process Optimization

TREND 2

Professional services providers need to embrace automation to stay competitive. How are professional services organizations optimizing processes with technology?

Technical skills and technology adoption are driving operational efficiencies and competitive advantage

Traditional administration overhead is being disrupted. The types of work that have the highest automation potential include finding and documenting information and analyzing data – all of which make up an average of 66% of hourly work that the average law firm takes on (Clio, 2024).

SMB Accountants are embracing AI. Firm of the Future found that 98% of accountants say they’ve used AI to assist clients in the past year (2024). In Canada, 97% of accounting professionals are confident in using AI in their daily work, with 89% believing AI can positively impact the industry (SRJCA, 2024). In contrast, adoption in larger, more traditional accounting firms is reported to be much lower, at roughly 27% (CFO.com, 2024).

Adoption of AI in engineering firms is slower than in other Professional Services. Though only 40% of engineering firms have started using AI, they are also focusing on complementary technology innovation such as digital twins, VR/AR, 3D printing, drones, and modular manufacturing (AEC Business, 2023).

34% of employment in the Euro area was at risk of automation by AI in 2023. (Source: Goldman Sachs, 2023)

91% - Over nine in ten legal professionals say it's important for technology to enable lawyers to adapt quickly to change. (Source: Wolters Kluwer, 2023)

“Technology is a magnet for those considering joining the profession. The firms that fail to match the expectations of the accounting and audit professionals of tomorrow will see their talented, dynamic employees drift to competitors who offer more tech-savvy, progressive environments.” (Source: Caseware, 2024)

TECHNOLOGY SKILLS AND ADOPTION ARE CRITICAL

• 90% of respondents agree that a willingness to learn and adopt new technologies is just as important as traditional accounting skills. (Source: QuickBooks, 2024)
• 60% of large firms are reporting that technology is helping with staff engagement and morale. (Source: Wolters Kluwer, 2021)

Signals

WHAT WE ARE SEEING | Technology capabilities pay dividends.

The number of companies who have successfully adopted modern, AI-led processes has nearly doubled from 9% in 2023 to 16% in 2024. Compared to their peers who have not gone through this technical optimization, these organizations achieve 2.5x higher revenue growth, 2.4x greater productivity, and 3.3x greater success at scaling Gen AI use cases (Accenture, 2024).

ROI is becoming clear. For example, implementing self-service contracts has been shown to save legal teams up to 600 hours and $54,000+ annually. There is little debate about the significant efficiency gains available through technology (AXDRAFT, 2022).

Literacy is a key component of process optimization. Large enterprises with strong corporate data literacy have shown up to 5% higher enterprise value, ranging from $320-$534 million, though only 24% of business decision-makers are confident in their ability to use data (Qlik).

Four in five respondents anticipate using more AI for administrative tasks, data analysis, and client communication. (Source: CPA Practice Advisor, 2024)

88% of respondents indicate that technology positively impacts workplace efficiency and client services in accounting firms. (Source: Rightworks, 2024)

Drivers

WHY YOU SHOULD CARE

• The benefits of process optimization and automation are no longer up for debate. Professional services organizations that haven’t embraced these changes need to act fast.
• Demonstrating value to the business with facts is an important capability. IT departments need to have the data and processes in place to calculate ROI.
• Technical, data, and AI literacy are precursors to success. Ensuring a general understanding of technology, not just knowing where to click, enables the future of Professional Services.

Understand process optimization in context

Process optimization is a multifaceted series of capabilities that support understanding and managing the human and technology element of complex workflows and processes.

Review Info-Tech’s Business Reference Architecture Guide for Professional Services for examples on how to assess process optimization as a series of capabilities in your business capability map.

Professional Services Guide
Professional Service Template