May 01, 2014

Disruption in Professional Services

A constant that companies can count on is innovation and change. Across industries, innovation and new business models have disrupted the traditional ways of doing business. Online education portals such as Coursera, EDX and University of Phoenix have edged market share away from conventional school systems. Hourly rental car services such as Zipcars have disrupted the rental car model, and cloud computing has compelled incumbent companies to change their business models, pricing strategies, sales channels, and even basic technology.

According to the Bureau of Labor Statistics (BLS), approximately 14 million people were self-employed in February 2014. Often people assume that these temp workers are limited to low-income professions, but temp work is starting to impact the professional services market as well. 

“The staffing industry has added more jobs than any other sector since the end of the recession.” ~Erin Hatton, Sociology Professor at University of Buffalo

The concept of using the Internet to match people to short-term jobs is widespread and growing. Companies can crowdsource workers to do rudimentary tasks or answer survey questions. People can find someone to walk their dog, babysit their children, or clean their house. Innovators can commission people to test their products, such as mobile apps. And there are even services that specialize in skilled tasks. TopTal concentrates on programmers with advanced skills in development languages, and Elance has over 3 million freelancers with talent ranging from graphic design to data science.

An Example: Consulting Services

In the traditional project-based model, blue chip consultancies are paid highly to provide advice to large corporations. Typically, companies pay for the partners, while the associates, who are skilled at basic consulting tasks such as building financial models and performing market analysis, do the work. Many consultants from top-tier firms enjoy the work they do, but do not want the long hours and extensive travel that employment at a consulting firm demands.

Online platforms such as SkillBridge are emerging to match these talented consultants with companies, who are able to get the same level of work without paying the price associated with the leading consulting firms.

“Clients don’t always need a big sales pitch, a hefty strategy document or to be schmoozed by senior executives. Sometimes, they just need work done.” ~Greg Satell, Recognized Authority on Digital Strategy and Innovation, Contributor to Forbes and HBR

The consulting industry is no stranger to change. In 2007, McKinsey and Company launched McKinsey Solutions, unbundling its offerings and focusing heavily on hard knowledge assets rather than in deploying human capital. And consultancies have changed from generalist to functional focuses, from local to global structures, and from tightly structured teams to webs of remote exports.

Today, temp work is threatening to disrupt consulting services. Consulting services that practice what they preach are starting to actively recognize this source of disruption and looking at ways to evolve their business model.

Demand Increases for Educated Workers

A survey by CareerBuilder reveals that more companies are looking for workers with higher educational degrees. About 27 percent of employers say that their educational requirements for employment have increased in the last few years. Employers are attempting to take advantage of the effects of the recession to fill open positions with higher-skilled workers. And 30 percent are hiring college-educated workers to fill positions previously held by high-school graduates.

Master’s degree holders are being targeted for positions primarily held by bachelor-degree graduates by 20 percent of companies. And a third of employers are sending current employees back to school for an advanced degree, with the majority offering at least partial funding.

“The economic value of a college education for workers has long been known, but as occupations evolve and as companies rely more heavily on professionals with strong interpersonal and technical skill sets, workers can’t afford to stop their education at high school.” ~Matt Ferguson, CEO of CareerBuilder

According to CareerBuilder’s 2014 U.S. Job Forecast, 26 percent of employers are planning on creating jobs and hiring in STEM occupations.

Positive Impact Seen by Hiring College-Educated Workers for Jobs Previously Held by High-School Graduates

Source: CareerBuilder

“What we call contingent workers is really hard to define, because to some extent we’re all contingent now.” ~Arne Kalleberg, Sociology Professor at University of North Carolina at Chapel Hill