US Professional and Technical Services Sector
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 976,264 professional and technical services establishments in the US provide specialized expertise to clients and typically operate as third-party contractors. As opposed to producing a physical product, professional service providers are primarily knowledge-based businesses that offer advice and make available the skills of their employees.
Dependence on Government Projects
The US government is one of the largest consumers of professional services, and federal, state, and local government organizations are important customers for several industries in the sector.
Dependence on Expensive, Skilled Labor
The professional and technical services industry is dependent on highly skilled labor and jobs that command high wages.
Industry size & Structure
The professional and technical services sector is comprised of 976,264 establishments that employ 10.8 million workers and generate $2.8 trillion in annual revenue, according to government sources.
- The professional services sector represents 6.5% of the nation's Gross Domestic Product (GDP) and employs 7% of the country's workers.
- The sector is fragmented with the 20 largest firms representing 11% of revenue.
- In addition to employer establishments, the professional services sector has 3.7 million owner-operated establishments with no employees. Subsectors with the highest numbers of nonemployer establishments are management, scientific, and technical consulting services (25%); accounting, tax preparation, bookkeeping, and payroll services (10%); and computer systems design and related services (9%). The owners of nonemployer establishments typically perform the work and may outsource support functions like marketing and accounting.
- The professional and technical services sector shed about 237,000 establishments in 2021, which equals about 14.7% of existing establishments, according to the Bureau of Labor Statistics. However, the sector added about 353,000 new establishments, which is equivalent to 22% of existing establishments. As a result, the sector had a growth rate of 7.2%.
- The professional and technical services sector is forecast to grow its employment base by 10.9% overall in 2021-2031, which is much higher than the national average of 5.3% for all jobs, according to the Bureau of Labor Statistics.
Industry Forecast
US Professional and Technical Services Sector Industry Growth
Recent Developments
Aug 22, 2024 - Data Center Technician – One of the Hottest Jobs in Tech
- The technicians who oversee data centers are in high demand amid the rapid growth of cloud storage and generative AI, according to The Wall Street Journal. Experienced data center technicians can command six-figure salaries, and entry-level positions are available for applicants with just a high-school diploma. The job requires a unique mix of mechanical ability and an understanding of technology, including programming. Typical tasks include repairing and maintaining servers and heating and cooling systems. Data technician pay has increased by 43% in the last three years, according to training and certification firm CompTIA. Job postings for data center technicians have increased by 18% since 2020, while overall tech job postings have fallen by half.
- Companies that fortify their ranks with positions related to climate often are outperforming their peers, according to The Wall Street Journal (WSJ). Companies are increasingly adding staff to meet their climate goals and help customers to do so, ensure compliance with environmental regulations, and shore up supply chains in the face of extreme weather events and energy shortages. Using a measurement of corporate effectiveness developed by the Drucker Institute at Claremont Graduate University and employment data provided by Revelio Labs, WSJ research found that firms with higher percentages of jobs related to climate tended to rank higher as effective organizations. Firms with the largest proportion of climate positions as a share of their overall workforces outperformed those with the smallest share. Companies with larger shares of climate jobs scored higher for customer satisfaction, innovation, social responsibility, employee engagement, and financial strength.
- By the end of 2025, at least 30% of enterprise projects related to generative AI will be abandoned following the proof-of-concept phase, according to a recent report by consulting firm Gartner. The key reasons generative AI projects will be canceled include poor data quality, rising costs, unclear business value, and inadequate risk controls. Executives may become wary of escalating costs in developing productivity-enhancing AI projects when they fail to yield direct financial benefits. Gartner experts suggest AI costs are difficult to project relative to other technologies but offered some benchmarking survey data that can help gauge effectiveness. A Gartner survey conducted in late 2023 found that, on average, early AI adopters reported revenue increases of 15.8%, 15.2% cost savings, and 22.6% gains in productivity.
- North American construction and engineering spending in 2024 is expected to grow by about 6%, according to FMI’s third-quarter 2024 North American Engineering and Construction Outlook. With growth of 28%, public safety will lead 2024 nonresidential building construction, followed by manufacturing (21%), educational (7%), and religious (7%). Commercial construction spending is expected to decline 7% in 2024 amid weaker demand for warehousing space, high interest rates, and tighter lending standards. Lodging construction spending is forecast to drop 6%, and stubbornly high office vacancies will continue to weigh on new office construction, which is projected to see flat spending in 2024. Despite high interest rates, single-family construction spending is forecast to rise 7% in 2024 as homebuilders reduce home sizes to improve affordability. Spending for multifamily is expected to decline by 1% in 2024 after projects in development peaked at 1 million units in mid-2023. At 9% growth, water supply will lead 2024 growth in the infrastructure sector, followed by highway and street (+8%), power (+8%), and sewage and waste disposal (+8%).
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