With globalization on the rise, businesses increasingly rely on professional service for entity formation. But firms are faced with a shortage of specific skillsets to bring out edges - and, most importantly, meet clients' expectations.
Entity formation has no longer lain in specialized knowledge and deep expertise, professional service firms must quickly adapt to global landscape and grasp opportunities in newly digitized world.
Professional service firms are struggling with entity formation and global compliance issues. It's time to grasp opportunities in a newly digitized world.
Professional service firms - Who are they?
The term refers to any firm or profession that offers specialized, knowledge-based service to clients in certain business areas.
The term refers to any firm or profession specialized in certain business areas, particularly related to advisory, management, and consulting services.
How people bring the term to mind?
Mid-1960s
Ever since the spectacular rise of the consulting sector in the 'mid-1960s', the term 'professional service' has increasingly been associated with management and business consulting services.
Now
As a result, when people refer to the professional service industry, they often refer to the market related to advisory services in the field of strategy, management and organization.
Lawyers
Accountants
Financial advisers
Business consultants
Market segments
In Adversity Lies
Opportunity
Professional service is a market where obstacles and opportunities co-exist. Amongst all upheaval, there is no shortage of potential clients for professional firms. Businesses are crying out for advice and support in entity formation, whether for structure advisory or regulatory. Firms are in a great position to capitalize on the growing market if they can spot opportunities to develop and nurture, as well as position themselves for growth effectively.
We break down the set of co-existed challenges and opportunities for professional services.
Professional service is a market where obstacles and opportunities co-exist. To capitalize on the expanding market, firms need to spot opportunities among challenges and nurture their growth potential.
Compliance risks
Staying compliant has become harder as professional firms face an array of different regulations, raising the risk of unintended errors.
Numerous firms have already suffered the consequences of failing to comply with global standards.
63% of firms see compliance as top challenge
The tough love firms need to thrive
Firms that faced regulatory risks regularly are more motivated to develop a better compliance process within their organizations.
Senior executives rank compliance as a priority, and 2/3 of them are strengthening compliance procedures through internal training, automation, and digitalization.
Source: EY | Compliance Risk Survey | Base: 510 global board directors from organizations with greater than US$1b revenue across a number of industries
Slow technology adoption
Professional firms are falling behind digital race, mostly because the price of both implementing technology and training staff to use it correctly can be tough to justify.
The increasing pace of technological change means that firms' advisories are out of date nearly as soon as they are made.
36% of professional firms are hesitant to embrace digitization because they're unsure where to begin.
Digital transformation during a crisis
Technology transformation can be fruitful as it helps professional firms to differentiate from the competition, add value for clients, improve operations, and pursue new growth opportunities.
49% of professional firms invest in technology see greater profits in 2021.
Source: Fujitsu | Global Digital Transformation Survey Report 2021 | Base: 1,200 business leaders across 9 countries
Lack knowledge of global entity formation
While clients' global reach is rapidly expanding, reaching unfamiliar regions such as the Southeast or Midwest, firms are hitting roadblocks simply because they lack sufficient experience in entity formation in each country.
Failure to gather the necessary resources and expertise, as well as a lack of familiarity with foreign jurisdictions, can result in compliance risks and reputation damage.
1 in 5professional firms said they were turning down work because they lacked relevant market knowledge.
Global expansion brings chances of growth
As international expansion becomes more complex, so do the needs of the businesses tapping professional services.
Firms are expected to be experts in local law, regulations, and other domestic specialties for every possible country. This, in turn, enable professional firms to emerge in terms of expertise and experience to thrive in unfamiliar new landscape.
47% of businesses worldwide already operate in more than 10 international markets, while 28% seek professional assistance with local regulatory or legal issues.
Source: Mazars | Business Without Borders Report 2021 | Base: 150 executives of middle market companies
Struggle with unfamiliar scope of service
As clients' needs evolve, firms may find themselves stumbling into unfamiliar scopes of service. For instance, a client starting a company in other regions may expect superlative service such as business bank account opening.
Local banking laws and policies towards foreign entities make this task even more difficult, necessitating a significant amount of unpaid time and uncompensated resources.
Despite a 14.5% increase in bank account opening, 49% of professional services worldwide do not feel prepared to meet these needs.
Behind every demand is a silver lining
Living up to client expectations can be exhausting, but firms now have more opportunities to turn these situation into positive changes within their organization, improve the level of services rendered, deepening relationship with client, and deliver better value-added solutions for future projects.
28% of clients say adding value is their number one priority when choosing a professional service.
Compliance risks
Various regulations raise the risk of error. Firms have suffered consequences for failing to comply with globals standard.
63% of firms see compliance as top challenge
Tough Love For Firms
Compliance risks motivate firms to make positive changes. Over 400 firms are strengthening their compliance procedures through training, automation, and digitalization.
Source: EY | Compliance Risk Survey | Base: 510 global board directors from organizations with greater than US$1b revenue across a number of industries
Slow To Adopt Technology
Increased pace of technological change means that firms' advisories are out of date as soon as they are made.
36% of professional firms are hesitant to embrace digitization because they're unsure where to begin.
Transformation During Crisis
Technology helps firms to differentiate from the competition, add value for clients, improve operations, and pursue new growth opportunities.
49% of professional firms invest in technology see greater profits in 2021.
Source: Fujitsu | Global Digital Transformation Survey Report 2021 | Base: 1,200 business leaders across 9 countries
Lacking Practical Knowledge
Firms are hitting roadblocks due to the lack of sufficient experience in entity formation in each country, leading to compliance risks and reputation damage.
1 in 5professional firms said they were turning down work because they lacked relevant market knowledge.
New Chances Of Growth
Demands for practical specialties enable firms to emerge in terms of expertise, knowledge, and experience
28% of businesses worldwide seek assistance from professional services in local regulatory and legal issues.
Source: Mazars | Business Without Borders Report 2021 | Base: 150 executives of middle market companies
Unfamiliar Scope Of Service
As clients' needs evolve, firms may find themselves stumbling into unfamiliar scopes of service.
49% of professional services worldwide do not feel prepared to meet clients' needs.
Behind Every Demand Is A Silver Lining
New demands bring positive changes to professional service, offering chances for improvement, deepening relationship with client, and deliver better value-added solutions for future projects.
Source: Deltek | Insight to Action – The Future of the Professional Services Industry | Base: 350 leaders of professional service firms
As the need for entity formation grows, firms must reconsider how they will meet these demands and be more competitive when pitching for new projects.
In this context, digital adoption is inevitable, and
of firms stated that they are investing in digital incorporation to help their clients
Digital incorporation eases compliance issues
By digitizing entity formation process, firms can ensure full-coverage compliance for clients in multi-jurisdictions, keep track of risk assement when forming new company, and reduce risks for each project.
Outsourcing is the secret to tech adoption success
Professional services choose to outsource the role and function of digital incorporation as a way to transform their firms digitally.
90% firms outsource from a third-party with at least one element of entity formation.
Tune in to clients' special needs
Digital incorporation is the same process of entity formation, but cover a wider scope of services e.g., bank account opening, tax filing, accounting & auditing, and more.
59% of firms save costs by using an ancillary service for tasks that were done in-house before.
Go DigitalGo Global
Whether your firms focus on consulting, advisory, accounting, or other professional services, BBCIncorp digital incorporation helps you drive better clients' experiences while adapting to global regulations seamlessly, without any headache.
We help you drive better clients' experiences while adapting to global regulations seamlessly, without any headache.
