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
Dec 20, 2024 - AI Investments Paying off
- Nearly all (97%) business leaders whose organizations are investing in AI report that their AI initiatives have generated positive return on investment (ROI), according to the most recent AI Pulse Survey by Ernst & Young. Just over a third of business leaders whose firms are already investing in AI said they expect AI investments of $10 million or more in 2025. All major metrics of AI-enabled ROI improvements saw gains since the last AI Pulse Survey six months earlier, including operational efficiencies (84% of respondents, up from 77%), employee productivity (83%, up from 76%), technology updates (82%, up from 74%), cybersecurity (81%, up from 74%), competitive advantages (80%, up from 73%), and product innovation (78%, up from 71%). Despite the ROI gains, senior business leaders are wary of AI’s risks; 61% of leaders whose firms have invested in AI reported growing interest in responsible AI practices, up from 53% six months earlier.
- More than three-quarters of CEOs at some of the world’s largest companies are optimistic about the global economy, according to a recent survey by advisory firm Teneo and reporting by The Wall Street Journal. The Teneo survey of CEOs of firms with at least $1 billion in sales showed that 77% expect the global economy to improve in the first half of 2025. CEOs are generally optimistic that a Trump presidency will help reduce corporate taxes and regulations. Over 80% of big company bosses foresee an uptick in M&A activity in 2025. An anticipated easing of access to capital also buoyed the CEO outlook.
- Some legal recruiters report that President-elect Trump’s plans to trim the ranks of government workers are prompting some rank-and-file government lawyers to look for work in the private sector, according to Reuters. One recruiter speaking to Reuters said he’s seeing five times the typical post-election volume of lawyers seeking to leave government work. According to the US Office of Personnel Management, more than 44,000 licensed attorneys work for the federal government. Legal industry insiders suggest lower-level attorneys with narrow areas of expertise may have trouble finding new positions in the private sector.
- Demand for building design services dipped slightly in November from the prior month, but there are signs that the architectural services market is gradually improving, according to a December report by the American Institute of Architects (AIA). The AIA’s Architecture Billing Index (ABI) fell to 49.6 in November from October’s reading of 50.3. Any reading of 50 or more indicates growth in architectural billings. The score for new project inquiries was 54.1% in November, unchanged from the October reading, and the index for the value of new design contracts increased from 45.3 to 48.3. The steady rise of new project inquiries is a positive signal of future business opportunities. However, architecture firms are unlikely to see a significant uptick in design activity soon as new design contracts fell for the eighth consecutive month in November.
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