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 6.7% 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 3.8 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 10.5% overall in 2023-2033, which is much higher than the national average of 4% for all jobs, according to the Bureau of Labor Statistics.
Industry Forecast
US Professional and Technical Services Sector Industry Growth
Recent Developments
Oct 22, 2024 - Tech Firms Invest in New Clean Energy Sources to Power AI
- The electricity-hungry artificial intelligence boom is spurring big tech firms to seek out new sources of clean energy to help meet the emissions-cutting pledges they made just a few years ago, according to The Wall Street Journal. The tech industry’s quest for clean energy comes amid an anticipated rise in electricity demand fueled by AI. A search on a generative AI platform uses ten times the electricity of a typical Google search. AI’s energy needs have created more cooperation between large tech firms and utilities. Google is partnering with a Nevada-based firm to buy geothermal power, and the search giant, along with Amazon and Microsoft, is working with Duke Energy on power produced by small nuclear reactors. Tech firms also hope to offset their increased emissions by entering deals with firms pursuing carbon capture technologies.
- North American construction and engineering spending in 2024 is expected to grow by about 5%, according to FMI’s fourth-quarter 2024 North American Engineering and Construction Outlook. With growth of 29%, public safety will lead 2024 nonresidential building construction, followed by manufacturing (21%), amusement and recreation (10%), transportation (5%), and educational (4%). Commercial construction spending is expected to decline 8% in 2024 amid weaker demand for warehousing space. 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 rise 1% in 2024. Amid moderating interest rates, single-family construction spending is forecast to rise 5% in 2024. A recent jump in new apartment supply is expected to reduce multifamily spending by 4% in 2024. With an increase of 14%, water supply will lead 2024 growth in the infrastructure sector, followed by sewage and waste disposal (9%), power (7%), and highway and street (4%).
- Large corporate legal clients are starting to push back amid rising hourly rates charged by some of the largest and most prestigious law firms, according to The Wall Street Journal. The hourly rates charged by law firms rose 9% in the first half of 2024 after growing more than 8% in 2023, according to the legal specialty group of Wells Fargo. Rates are increasing as only a fraction of law firms are adept in key services such as regulatory compliance, merger counseling, and tax and private equity. To reduce their costs for outside legal advice, some firms are bringing more work in-house, turning to smaller boutique firms, or pitting law firms against each other to get more competitive bids.
- Except for positions related to AI, jobs in the tech industry are increasingly scarce, according to The Wall Street Journal. Software development job postings have fallen by more than 30% since February 2020, according to Indeed.com. Since the start of 2024, tech companies have reduced headcounts by about 137,000, according to Layoffs.fyi. Heavy tech firm investments in AI have left fewer resources for other tech areas showing less promise, including devices and virtual reality. Tech firms are also cutting back on entry-level positions, internships, and tech recruiting teams while relying more on consultants and outsourcing. However, demand for AI-related tech fields remains strong, and some laid-off tech workers are upskilling by taking AI courses.
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