The services industry has experienced unprecedented levels of growth during the last several years and shows no signs of slowing down.
The market is growing and services organizations are changing, adopting new technology and targeting a wider range of clients than ever before. This level of incredible opportunity and its accompanying challenges have surfaced in our third annual State of the Services Economy report.
Here’s a sneak peek at the six major trends within the industry covered in this report.
1. Growth is the Greatest Priority and Challenge
The services industry is experiencing growth, with a total of 64% of respondents stating their businesses are growing. The question is, how do companies take advantage of this sustained industry-wide growth? This is the year companies take advantage of major opportunities and refine business processes that have become increasingly complex.
2. The Race to Compete is Fraught with Challenges
Companies are expanding to provide new services to entice clients that would typically be served by other providers, often from other industries. This has exposed them to a new set of competitors and 70% of respondents state they have experienced increased competition in the last 12 months. Fueled by increasing access to skills and talent by the rise of the distributed workforce, the sectors of the services industry are beginning to blur. It comes as little surprise that organizations chose increased competition as one of the top business pressures in 2019.
3. Client Expectations Show No Sign of Easing
When it comes to the top business pressure of 2019, services organizations indicated managing changing customer expectations as one of the top three pressures, underlining its continued importance in long-term business strategy. Client expectations regarding the quality of work they receive from a services organization continue to rise, with an eyebrow-raising total of 85% of surveyed services organizations saying that client expectations are increasing.
4. Major Operational Challenges Thwarting Growth
Operational challenges that arise from a variety of sources stand between services organizations and the growth needed to thrive in the industry today. Despite the increasing use of internal solutions and a distributed workforce, our report has found that 31.2% of projects fall short on budget while 29.7% fall short on timeline. Businesses may be growing and changing in the services industry, but there is still plenty of room left for improvement.
5. The Distributed Workforce Key to Client Retention
The demand for a wider array of services from businesses requires companies find the right talent regardless of location. This interplay between client demands and service variety is driving the distributed workforce’s prominence in the services industry. There is an industry-wide increase in distributed work, with 80% of respondents stating they support remote employees and the majority expecting an increase of remote working within their teams.
6. The Abundance of Technology Complicating Business
While new applications continue to bring innovative capabilities to workforces, manual work often needed to use and connect them when they are not properly integrated stifles true potential and creates a lack of clarity. These challenges ripple through many companies, with manual work, visibility, and data accuracy ranking as the top three technology infrastructure challenges currently faced by services providers.