Despite a mixed environment, professional services firms in the United Kingdom are positive about the outlook for 2024, with technology serving as a key enabler of growth and a top investment priority. This is according to new research from Deltek.

The 2024 annual Trends & Insights report from Deltek (known as ‘Clarity’) shows that professional services firms remain optimistic for the current year, even against a backdrop of tighter professional services spending, geopolitical issues, and other pressures.

In the UK, over 8 in 10 respondents predict a profit increase in 2024 – a rise from around 7 in 10 at the same time last year. Notably, consulting firms are more optimistic about profit growth compared to their architecture and engineering.

Source: Deltek Clarity Study 2024

Leaders said they believe profit hikes will come from more robust management of utilisation and hours registration (more chargeable hours and less income leakage), a more efficient balance between employee/cost ratio, and a cutback in expenses.

For its Clarity report, Deltek canvassed the views of 400 senior decision-makers, including CEOs, C-suite level directors, and heads of departments such as Finance, Operations, Delivery, or Projects. Around half of the respondents are based in the UK.

Investing in tech

There are also big plans to leverage technology, said the report. While this will require investments, leaders are convinced they will be able to reap the benefits from the likes of smarter systems and generative AI, which is taking professional services by storm.

Technology holds the top two positions on the list of biggest growth opportunity for the next 12 months, with investing in IT infrastructure and emerging technologies mentioned more often than client-facing factors such as boosting the customer experience or enhancing brand positioning.

As such, leaders placed technology investments at the top of their priority list for 2024, flanked by more effective sales/marketing. Notably, investments in talent dropped off slightly, with the labour market cooling down from the highs seen over the past two years.

Priorities are consistent across the landscape, although consultants (37%) are more likely prioritising the effective implementation of emerging technology – in part because it helps them attain a frontrunning position in practicing what they preach at their own clients.

Most well-known emerging technologies are perceived as being important to professional services groups, with cybersecurity and data analytics at the top, although artificial intelligence (and generative AI) have increased significantly in importance since the previous edition of the Clarity report.

One respondent to the study said that AI can offer consultancies “massive opportunities to do the ‘grunt work’ that’s currently manually performed”, in turn freeing up people to focus on more value-add tasks. Meanwhile, another leader highlighted, “For us, it is key to understand how AI can help us and our clients fully; how can it overcome business challenges.”

Indeed, around three-quarters of all leaders surveyed told Deltek they believe that successfully implementing AI will give them a significant competitive advantage (74%), expand the services that they can offer (74%), and improve their staff’s job satisfaction (72%).

In the consulting space, leaders pointed at operational efficiency and project delivery as the top use cases for AI benefits. On the latter, they feel that AI could help alleviate 3 of the top 4 challenges they face when running projects – managing a consistent quality of deliverables, reducing the administrative workload, and improving project document workflows.

“AI tools can help automate and simplify processes, and make it easier to keep trac of key performance indicators across the project lifecycle,” said the report.

Improving digital maturity

While technology and AI is a high priority, Deltek’s study found that few firms label themselves as digitally mature. Only a quarter (25%) are currently at the ‘Advanced’ or ‘Mature’ stages of digital maturity. 

However, over half (57%) of firms feel that they’ll be at least ‘Mature’ in three years, meaning that significant investments in technology can be expected. Those being left behind are starting to get worried – three-quarters (75%) are concerned about competitors implementing technological advancements faster than they can.

Consultants (88%) are the most likely of the three groups to increase investment, with architecture firms (70%) being least likely to increase investment.

Deltek’s annual Clarity report serves as a guide for strategies and investments for firms in management consulting, architecture, and engineering. The report was delivered in collaboration with 3Gem Research.