Written by – Paul Bonomy & Paul Hugh-Jones
Talent wars, CX (Customer Experience), and ESG (Environmental, Social & Governance) are some of the key trends driving the professional services market in 2023. Beaton partners forecast the hot topics you need to know for the new year as the services market evolves in response to industry trends, growth opportunities and shifting client expectations. The services sector—covering everything from financial services and law firms to management consulting and advisory services—is poised for ongoing growth, particularly as professional services organizations integrate digital transformation, data analytics and technology consulting into their service delivery.
1. The war for talent rages on
The talent war has been a major topic for professional services firms throughout 2022, and this trend looks set to continue through the new year across the broader sector. According to the CommBank Accounting Market Pulse and Legal Market Pulse reports, firms have faced a shortage of quality professional staff since the COVID-19 pandemic eased, lockdowns ended and economies restarted. The gradual reopening of borders, visa delays and the expense of international travel have limited firms’ options to recruit internationally, adding to the challenges professional services firms face in a globally competitive market.
This issue is compounded by many employees making career pivots or personal “resets” after experiencing new flexibility and balance while working from home during the pandemic. CommBank’s most recent legal research, published in May 2022, calls the talent war the sector’s “biggest challenge so far,” with a net 93 per cent of firms reporting that finding quality staff is difficult. Demand for professional business services remains high, intensifying competition among service providers to attract top performers with advanced skills, including those in artificial intelligence, machine learning and data analytics—factors that support digital transformation and future growth.
“There appears to be no easing of the demand for quality professionals – both legal and business services,” agrees Beaton partner Paul Bonomy. “Firms are responding to this by adopting a variety of retention strategies – most notably flexible working arrangements with a view to developing an inclusive culture in an environment where working remotely for part of the week has become the ‘new normal’.” Such strategies can also help firms maintain growth in the face of new market pressures and evolving trends.
Bonomy adds that firms focusing on the link between excellent employee experience (EX) and excellent client experience (CX) will be most successful at retaining and recruiting talent. By cultivating a positive EX, professional services organizations can drive higher engagement, lower turnover and better service delivery, expanding their global footprint and ensuring continued growth.
“Firms that invest in employee well-being, skill development in technology consulting services and advanced leadership strategies often find it easier to respond to emerging industry trends and shifting client expectations.”
2. Client experience
Client experience could be the “single most powerful and sustainable market differentiator” for professional services firms in 2023. As organizations face intense competition, they must continually refine how they address client expectations in an increasingly digital environment.
The relatively new concept—dubbed CX—is quickly becoming an essential area for firms to understand and invest in. Unlike the “customer experience” in retail, which implies a one-way journey to sale, client experience refers to an ongoing relationship shaped by clients’ perceptions and feelings from all interactions with a firm’s brand, people, products and services. The role professional services plays in shaping standout CX involves not just the consulting or legal services themselves, but the entire process of engagement, including any technology consulting or advisory services organizations may require.
Research shows firms that invest in improving CX can differentiate themselves and gain financial, cultural and other benefits. Firms that excel at CX can adapt more readily to market pressures, maintain consistent growth, and even expand into new offerings such as risk management and data privacy advisory. Strong CX also supports the retention of top-tier talent, which is vital in meeting demand.
“Firms with leading CX compared to competitors grow faster and are able to charge more. They have happier people, better retention and all-round superior performance. This is critical in the current market,” says Beaton partner Paul Hugh-Jones.
Hugh-Jones adds that successful firms need to ensure all staff members buy in to improving CX – not just those in marketing or client-facing roles. A firm’s ability to harness data analytics, artificial intelligence and machine learning can further enhance service delivery and increase efficiency in management consulting and law firms.
“CX is much more than the service a client receives. CX applies to all interactions with a client, starting before you work with a client and continuing after the job is finished. And it isn’t just the delivery team who have client contact, it involves everyone in the organization and everything – including process, systems, technology. Ultimately, this aligns with the professional services industry focus on innovation, digital transformation and the future landscape.”
3. ESG and social responsibility
Environmental, social and governance (ESG) has recently become a factor driving decisions for many professional services firms and their clients, signaling a shift across the sector. In 2023, a firm’s stance on ESG will become a fundamental part of its brand—one that can attract or deter potential employees and service providers as well as clients across North America and beyond.
“Firms have recognized that aligning the firm’s values with those of current and prospective employees is proving to be an effective retention and attraction strategy,” says Bonomy. This alignment also influences how organizations approach risk management and data privacy within their advisory services, as well as how they address challenges in delivering long-term value.
According to Beaton’s culture study, which surveyed 767 key decision-makers, 44 per cent of clients consider ESG risks and opportunities an important factor when choosing which firms to engage. This focus on socially responsible behavior is increasingly reflected in industry trends across global professional services, with providers seeking stronger ESG frameworks to drive sustainable growth.
Clients have specifically chosen or walked away from consulting or law firms that are not responsive and transparent about their stance on issues like workplace diversity, inclusion and social and environmental sustainability. Nowhere is this more topical than in Australia – which conducts more climate change litigation per capita than any other nation in the world. Industry leaders, including prominent consulting firms and organizations like Korn Ferry, have highlighted ESG as a key concern shaping the future environment.
In 2023, the authenticity of a firm’s approach to ESG will also be crucial. Clients are shrewd and dislike seeing firms fail to “walk their talk.” For example – if a firm prides itself on diversity and inclusion within its employee ranks but only markets to male clients externally, there could be a branding disaster waiting to happen. This directly reflects how the professional services market values corporate transparency—any disconnect can undermine both growth and overall credibility.
