The 2024 professional services outlook
From resilience to recovery
In 2023, macroeconomic uncertainty, geopolitical risks, and fears of a looming U.S. recession challenged the market for professional services. High interest rates and inflation levels coupled with rising input costs translated to shrinking profit margins for many companies.
By the end of September 2023, the net profit margin of companies in the S&P 500 was 11.6%, marking a year-over-year decline for the seventh consecutive quarter, according to FactSet. As a result, many companies implemented cost-cutting measures, impacting the volume of opportunities available to professional services firms.
However, 2023 ended with a better economic outcome than most predicted. As of December 2023:
Given fading recession fears, cooling inflation, and expectations for improving corporate profits, many are hopeful about the outlook for the professional services industry in 2024.
Our survey of more than 160 individuals in professional services (including industries such as consulting, recruiting, and staffing) aligns with this optimism. Over 70% of respondents anticipate more projects this year.
Our data shows that firms anticipate a growing demand from companies for assistance in improving operational efficiencies, adopting artificial intelligence (AI), and addressing ESG-related objectives.
But to win these projects, many professional services firms need to adapt to new market realities. Find out the three areas top professional services firms are prioritizing right now to prepare for stronger activity in the months to come.
Firms are preparing for more opportunities by improving how they manage client relationships. When asked about which processes they plan to make more efficient in 2024, 57% of respondents listed ‘building relationships for future deals’ and ‘managing existing clients’ as their top two priorities—above sourcing new clients and managing projects.
This shows that professional service firms are hyper-focused on existing clients this year, and they’re looking for more effective ways to manage both new and existing clients.
The challenge is that oftentimes, teams lack an efficient way to share information with their colleagues. Details about prospects, clients, and projects can get siloed in emails, calendars, meeting notes, and Excel spreadsheets—especially when firms scale or make hiring changes. This leads to information getting lost or people spending unnecessary time retrieving it.
Firms are looking for a consolidated way of tracking and managing relationships and projects.
“I had plenty of business relationships, but no way of keeping track of them. Information about clients and potential clients was everywhere—my email inbox, my calendar, and various Word and Excel files—that is, if I remembered to record it.”
Relationship intelligence helps firms get more out of their existing tools—which more than 60% of respondents are prioritizing this year—specifically with their customer relationship management systems (CRMs).
62% of firms are looking for better ways to use existing technology this year.
By augmenting their CRMs with relationship intelligence, firms can build a comprehensive, systematized approach to relationship management.
Relationship intelligence combines data automation and AI to uncover valuable insights into a firm’s shared network—like who knows whom and the strength and history of each relationship. It enables teams to strengthen client relationships and close more deals by using the full potential of their collective network.
For instance, relationship intelligence can reveal which of your colleagues knows key decision-makers at a prospective company. It can also show when they last spoke, what they talked about, and how strong their relationship is. All of this is information you can deploy to build rapport with clients.
Simplify relationship and project management by centralizing your firm’s insights. With Affinity for Salesforce, you can:
With customizable Salesforce dashboards, you can graphically depict and manage your contacts alongside your opportunity pipeline—making it easier to keep track of key relationships and deals in progress.
Affinity tracks all engagement activities—like meetings and emails—to automatically capture, update, and enrich your Salesforce records. This way you can focus on higher-impact tasks.
Affinity’s browser and inbox extensions allow you to work more efficiently with instant updates in the tools you use every day—surfacing relationship, activity, and project insights directly where you’re working.
96% of our respondents plan on implementing AI.
Professional services firms aren’t just advising their clients on how to adopt AI, but they’re considering how to integrate it into their own firms to fuel growth. Almost all (96%) of our respondents said their firms plan to adopt AI. We also asked if firms are more interested in considering technology this year compared to previous years, and 67% said yes.
Firms have an appetite for AI and recognize its transformative potential, but they’re thinking carefully about how to implement it.
Deloitte estimates that when firms integrate AI strategically, "there could be as much as US$1.25 trillion in market cap to be gained among Fortune 500 companies. Conversely, when they get it wrong, there’s as much as US$1.5 trillion in market cap at risk.”
To increase revenue, professional services firms are integrating AI into their systems and processes in a way that aligns with their long-term objectives.
Although our respondents are considering using AI across processes, they’re primarily using it to drive productivity and growth—ultimately to expand their businesses.
Implementing AI can save time across numerous data-driven processes. Over half (55%) of respondents are considering using AI for data analysis, a core task for professional services firms.
Through analyzing data such as market, financial, or company data, firms can use AI to summarize industry trends, consumer behavior, and internal processes, such as automating meeting notes. AI can also help develop business strategies and forecasts.
Using AI to speed up core tasks enables firms to focus on higher-impact and strategic activities, like finding new clients and strengthening existing relationships.
Firms are also interested in using AI to drive growth. Over half (52%) of respondents are considering using AI to both identify new clients and to score and analyze their firm’s network.
Firms can use AI to filter client and opportunity lists based on set criteria. They can also use it to quantify their relationships by calculating relationship strengths based on the recency and frequency of interactions between individuals, which is the basis of relationship intelligence.
This allows firms to understand the nature of their existing connections, discover overlooked opportunities within their networks, and identify gaps in coverage—all of which can be strategically deployed to grow their businesses.
“We have to shorten our lists because we don’t have time to talk to everyone. Affinity helps us use our time wisely.”
Founders Intelligence is a UK-based management consulting firm that delivers growth strategies for FTSE 100 companies and other global organizations.
To stay competitive, their team needed an efficient way of developing the perfect shortlist—a hyper-targeted list of potential prospects that meet their outreach criteria. However, the team was spending too much time on manual prospecting and data entry.
With Affinity’s automated and enriched data fields—like company location, sub-industry, and current job title—the team can quickly filter opportunity lists based on their criteria.
Affinity’s patented relationship strength algorithm evaluates relationship depth to calculate a relationship strength score. This enables the team to identify the best points of contact between their firm and target companies.
Relationships are essential to the professional services industry, especially when it comes to sourcing new opportunities. In our survey, 66% of respondents believe their firm’s existing network and shared relationships are very important in sourcing new projects.
With expectations for improving market conditions, firms are gearing up to secure more deals by prioritizing client relationships. Over half (53%) of respondents are preparing by nurturing existing client relationships.
Why are firms so focused on existing client relationships? It’s because the majority of deals are already within firms’ networks. 47% of respondents expect over half of their new projects to come from their firm’s existing network.
The key is building on and using established connections to uncover these opportunities.
47% of firms expect over half of their projects will come from their firm’s network.
Despite how important relationships are to securing new opportunities, many teams grapple with insufficient information and methods of tracking their relationships.
When projects are put on hold or delayed—like during periods of market volatility—it’s important for professionals to maintain a consistent dialogue with their clients. However, it’s also more difficult to keep track of relationships and logistics as their focus is drawn to live projects. By demonstrating they’re adding value regardless of the market cycle, firms can foster trust with clients and drive repeat business.
Top firms understand the value of their networks and how to use them to access the best opportunities at the right time.
“Putting together consulting deals is not a linear process. Projects I sign today may have started with a conversation last year with someone only tangentially related to the actual project. Affinity is structured specifically for a relationship-driven industry like consulting.”
By unlocking the full potential of your firm’s network, you can strengthen client relationships and discover new opportunities. With Affinity for Salesforce, you can:
Affinity captures your firm’s collective network, allowing you to uncover existing but hidden opportunities and increase your universe of quality contacts.
Through syncing with your email, calendar, and Salesforce activity data, Affinity surfaces your firm’s history of interactions with a prospect or client—allowing you to understand and deploy the full context behind relationships.
Affinity can alert you when relationship strength scores for key contacts fall below certain thresholds, reminding you to reach out when a relationship is at risk.
With ongoing geopolitical instability, companies continuing to slow hiring and conduct layoffs, and uncertainty as to when central banks will begin cutting rates, there are diverging opinions on when we’ll see a market recovery.
Despite this uncertainty, our respondents are firm in their belief that the year holds promise for professional services: Almost three-quarters (72%) of respondents anticipate an increase in the number of projects they take on this year.
As macroeconomic conditions show signs of improvement and as companies are driven to stay ahead of their competitors, our respondents anticipate a growing demand for their services. Over half (56%) believe companies will seek professional services this year for advice on improving operational efficiency, while 55% believe they’re looking to enhance AI capabilities or acquire other technologies.
As professional services firms prepare for a potential increase in opportunities, they’re shifting their focus to strengthening client relationships and their process for managing them. Top firms know that overlooking connections and inefficiently managing relationships can lead to missed deals, especially in a tougher market environment.
At the same time, firms are strategizing about how they can integrate AI in ways that align with their long-term objectives. Like relationships, they’re thinking about technology as a way to remain competitive and drive value.
Through a combination of relationship management and strategic investments in technology, firms will both enhance efficiency and position themselves for more deals in the coming months.
