Five Business Trends You Need To Know For 2017

The service industry is currently experiencing unprecedented levels of growth, and doesn’t show signs of letting up anytime soon. Why? The speed and complexity of business today have rendered traditional enterprise models inadequate. With rapid evolution in markets and competition, organizations must become continuously more lean and agile. External providers allow a business to tap into the right resources, at the right moment, in order to innovate and leverage new technologies at speed. Furthermore, globalization provides access to the world’s best and brightest resources, and it’s easier than ever to collaborate with a global team.

Today, we can affirmatively state that the United States is a services economy.

However, as the services industry continues to grow, leaders share anxieties over how to transverse the new economic landscape. Don’t fall behind the competition. If you can identify the drivers of change, you are that much closer to understanding how your organization should adapt.

Below are five of the key trends driving change in the services industry in 2017 — review these trends and learn how to prepare your business for the future of work before the shockwaves of change hit you and your organization. The following data points are pulled directly from State of Service Economy Report by Mavenlink & Gigaom.

1) The Speed of Business

One major trend that appears to be endemic is the shift away from retainer-based work to projects. The average contract length is shortening. Engagements today are often measured in weeks versus years. The research reveals that nearly 90% of respondents are majority project-based work (57.9%), or 50/50 project- and retainer-based work (26.9%), so the shift away from projects is pretty far along. 89.1% of respondents also say they are either trending toward more project-based work (53.1%) or are doing the same amount of project based work (36%). The bigger the company, the more quickly they are moving to project work. We believe the move to projects is being driven primarily by clients that are increasingly demanding delivery at an unprecedented speed, as well as looking to create clearer models that represent an improvement in billing transparency. Whatever the drivers, from the service provider perspective, the shift is clearly a response to economic forces, and the need to remain competitive.

2) Acceleration of Innovation

We all sense that the world is spinning faster: the pace of technological change and innovation continues to increase, relentlessly driving the economy forward. As technological innovations continue to emerge at exponential rates, businesses are forced to adopt practices and models influenced by new technology. Be prepared to make decisive choices on software, tools, and processes — they are the future of business scalability. Innovations continue to surface that will change business process forever.

3) Unrelenting Pressure to Adapt

How quickly is the services economy changing? There is no historical precedent for the speed of change we are witnessing. Over three quarters (78.3%) of those surveyed in the report respondents say business conditions are changing quickly, and 20% say it’s faster than ever before. This sets the background for everything else in the report: an unrelenting pressure to adapt to a rapidly changing business context, one that — at least for some — is changing as quickly as it ever has. This intersection of innovation and disruption is also creating anxiety — more than half of the respondents state in the last 12 months, it has gotten harder to operate a services organization.

4) Outsourcing

At the core of the changing economics of the services economy is the rise of an on-demand sub-provider and contractor network. We focused a number of survey questions at this area, exploring the rise of the services supply chain. 89% of respondents stated that its important, or even critical, to be able to tap subcontractors to scale the workforce to meet surges in demand. Furthermore, 95.6% are actively seeking new subcontractor relationships. 35% of respondents say the primary driver for working with on-demand sub-contractor firms and independent contractors are specialized skills that full-time or in house teams do not have, while 44.5% say it’s the core need to scale up to meet client demand. This is evidence of a new working style, one that’s critical for building strong client relationships, in today’s environment.

5) Globalization

68.3% of services firms are reaching into new geographies to source outside resources. We were surprised at the drivers, though. Only 15.2% of those using subcontractors in new geographic areas did so because of greater availability, and only 18% did so to reduce costs. The top drivers were clients explicitly requesting work in those geographies (38.8%), and the need for specialized skills (27.2%). Whether you are a five person firm or a 5,000 enterprise organization, expect to go global in 2017.