Professional services

The relatively low barriers to entry for professional service providers may make the professional services industry easy to enter, but can delude entrants and even practicing professionals on what it actually takes to sustain a thriving professional practice.

The East African Community common market negotiations categorise professional services into 12 sectors: Business Services; Communication Services; Distribution Services; Education Services; Financial Services; Health Services; Construction and Related; Engineering; Environmental Services; Tourism Services; Transport Services; Recreational, Sporting, Cultural Services and Others.

In Kenya, the professional service industry (excluding tourism, telecommunications and transport ) is dominated by the banking and insurance services sectors, which account for approximately 75% of revenues and 35% of employment.

Our advisory work in the professional services industry segments professional services along professional practice lines.

The professional services industry in Kenya is characterised by an unfavourable mix of few large, dominant firms that control between 25 and 35% of the various sub-sectors, and many small firms and individual practices that control between 65 and 75%.

Apart from these larger firms, majority of professional services firms are not adequately funded to provide the quality of professional services that would render them competitive.

Huge disparities in the level of investment across professional services providers within the various sub-sectors lead to similar disparities in the quality and fees payable for professional services, which confound the market and make it difficult to actually get reliable, high-quality professional services in the market.

The low level of funding in the professional services industry, undercutting of fees, and fragmentation of the market frequently means that providers of professional services are not able to attract and retain skilled professionals – many of who are themselves involved in small and struggling start-ups.

While most professional services firms are owned, and managed by qualified and experienced persons, many of who formerly worked in large organizations in both the private, and public sectors, their day-to-day involvement in the businesses they now own stretches them beyond both their technical, and physical capabilities. This, many times, creates a management and leadership gap, where the absence well developed management structures and management personnel creates firms and professional practices that are not quite able to “take off the ground”, even after many years of existence.

This rampant situation is responsible for the very low trans-generational survival rate within the professional services industry.

Professional services providers across the world are self-regulated, and while some – such as providers of legal and financial services – have shown ability to make self-regulation effective, most self-regulation mechanisms are characterised by fragmented industry associations in competition with one another. Politics of industry control, inadequate funding of industry secretariats, and the absence of a supporting legal and regulatory framework within which industry associations exist make them weak and render them largely ineffective.

This means that while most professional services industry associations have very clear understanding of what needs to be done to strengthen, grow, develop and sustain their respective industries, not all professional services providers in the respective industries are bound by obligations emanating from this understanding. Some even refuse to join or otherwise cooperate with established industry associations or even start rival associations to defend their positions.

At firm level, concerns for governance are no less. Many professional services firms may be registered as limited liability companies, but most ultimately operate as sole proprietorships. This frequently shows in their level of compliance, fiscal and human resource management, and impacts on their ability to attract skilled professionals, their ability to obtain credit finance, and ultimately their sustainability.

Fragmentation in the various sub-sectors across the professional services industry creates low economies of scale, high operating costs, low investment and translates into low levels of reliability. This makes it difficult for most professional services firms to attract big business, and even where consortiums are formed to consolidate capabilities, challenges related to management and accountability in such consortiums threaten their effectiveness.

In East Africa, for example, though the East African Community is growing at approximately 7% annually, professional services providers are concentrated in the respective capital cities, with little or no capacity to extend their reach to other areas of the country, let alone to the other East African states.

Areas with high potential, if professional services firms can focus on business development include the following among othes:

• Accountancy and financial management;
• Architecture and quantity surveying;
• Eengineering;
• Information, Communications Technology (ICT) and Information Technology Enabled Services (ITES);
• Legal Services;
• Insurance and non-banking financial services such as asset management, stock broking, foreign exchange and investment fund management;
• Business Process Outsourcing (BPO); and
• Freight forwarding services.

We have developed various advisory solutions around the following areas in response to the various challenges that professional services clients face:

• Success Model Suit (SMS) advisory

Growing a professional services organisation to a level where it is operational and self-sustaining is hugely challenging. The low and often non-existent barriers to entry lead to competition from every possible source. This is where sound strategy can make a big difference.

Our advisory work in Strategy, and especially our SMS solution present professional firms, associations and individual professional practices readily adaptable solutions for growth and sustainability.

• Business development

Big organisations, which most professional services firms are not, maintain well financed operations responsible for market development, product development, business planning and customer service. This considerably disadvantages most professional services firms since they are not able to access and therefore structure their development on intelligence that reliably informs them of market, product and customer decisions they should be taking at a particular time.

This is precisely the need that our Business Development advisory work responds to.

• Learning and development

We work with a wide range of professional services firms, to develop a vast range of learning and development solutions, most commonly focusing on the following among other areas:

• Leadership skills development
• Financial awareness
• Project Management
• Selling skills
• Customer service and account management
• Business account management

Our work in Management Training, especially, meets most professional services firms' requirements in these, and other areas.

• Outsourcing

Most professional serviecs firms are relatively smaller than many corporate organisations, and they may, therefore, seldom be able to maintain support operations of the magnitude they actually require. Most professional services firms are also led by persons highly competent and experienced in their areas of work and who would prefer not spend too much time on matters that are not core to their areas of work.

Our Outsourcing service, especially in accounting and financial management provides professional firms and individual practices critical operations support at a fraction of what it might otherwise cost them to maintain such capabilities in-house.