The services industry is experiencing new types of pressures that are changing businesses around the world. In this blog series, we will examine the six major pressures facing services firms today, their causes, and how you can successfully respond.
Pressure #1 - Short-Term, Project-Based Work
Today, services firms are seeing an increased shift to more short-term, project-based work instead of long-term contracts and retainers. More services than ever are primarily one-off projects, meaning that firms cannot rely on the financial security of contracts and regular work for the foreseeable future.
According to Mavenlink research, 76% of new services provided by surveyed firms have primarily been one-off projects. The shift to short-term, individual project work instead of contracted services is growing, and changing the services economy along with it. Understanding the reasons behind this shift to project-based work and how services businesses are most commonly responding can help firms create successful strategies.
What’s Causing This Pressure?
Businesses are consistently increasing their expectations of services firms, wishing to receive work that is completed faster than ever and specifically tailored to their unique needs. Research from Salesforce reveals that 63% of customers also expect companies to provide new products and services more frequently than ever before. To fulfill these demands, businesses may seek out individual projects from various services firms, increasing their agility in responding to new demands and strategies by not being locked into contracts that dictate the amount and frequency of work they receive.
This approach to projects will help a business dictate the exact nature of the services they receive, but it may also result in firms losing stability and facing new challenges in their client relationships. One bad project can cause major disruptions within a client relationship that does not depend on long term contracts, causing a client to seek out competitors for future projects.
Alleviating The Pressure
Mavenlink research shows that services firms are responding to the move to short-term work by diversifying the types of services they provide. In the last 12 months, 89% of services executives stated that they have expanded their service offerings for clients. This greater variety in the types of services offered by a single firm can help capture more projects and prevent clients from choosing other businesses. But firms also need to be able to deliver these projects quickly to match today’s expectations of fast turnaround.
The ability to scale at will is critical for services firms, as this will help them react to changes in the amount of projects in progress at any given moment. Using freelancers and contractors provides this ability and reduces costs that come from full-time staff who are underutilized in times where fewer projects are requested by clients. Firms that are experiencing more short-term work and underutilized employees should review what positions are best for full-time roles and which should be fulfilled by contract or freelance workers. The right balance between full- and part-time can make a firm more agile and able to respond properly to these changing client demands.
Succeeding in the Modern Services Industry
Not every services firm will experience the same pressures or the same degree of changing client expectations in their industry. But preparing for an increase in short-term projects and a loss of long-term contracts can help your business respond when the time comes and prevent losing projects to prepared competitors.
Learn more about overcoming pressures in our e-book, “Thriving in the Service Level Economy.”