We explore Source’s latest market sizing data on six particularly interesting professional services markets and consider the factors shaping their performance and the implications for firms.

Growth in the global professional services market came under pressure in 2023 and that looks set to continue into 2024. Performance looks sluggish early in 2024, with any recovery earmarked for later in the year. Our annual forecast is for around 6-7% growth in both 2024 and 2025. However, the consulting market, which includes only part of the technology services sector, is likely to grow by 1-2 percentage points less than the broader professional services market.

But what will this look like on a sector-by-sector basis? And are there any opportunities for above-average market growth?

Please note that at this point in time, all 2023 figures are provisional and may change.

Average market growth will fall to 6%-7% in 2024-25, with all sectors following this downward trajectory.

1 Energy & resources

From 2024, energy & resources (which in our definition includes utilities) is forecast to be the star sector in a largely disappointing market. But even this performance is down on its post-pandemic boom. In 2023 we expect the market to have grown by just over 10% to reach approximately US$114bn, and in 2024 our forecasts indicate that growth will remain around the 9-10% mark over the next two years.

This above-average growth rate is partly driven by propensity to spend within the industry: Commodity prices are high and global energy consumption (for both fossil fuels and renewable energy) are continuing to rise, largely driven by demand in Asia.

Services that look set to thrive include risk work (unsuprising amid today’s geopolitial turmoil), strategy, operations, and ESG—all clearly indicating that the sector is taking the opportunity to reshape and position itself for the future.

2 Financial services

Financial services is by far the largest global sector for professional services, set to weigh in at around US$356bn in 2023. However, this means that its sluggish growth rate of just 6% in 2023 (a significant drop from around 11% in 2022) disproportionately pulled down the market average.

Low levels of confidence among business leaders in financial services may be contributing to this decline in growth. Back in October last year, we shared how clients in this sector were the ones most likely to say that the macroeconomic situation and political tensions had significantly reduced their confidence about the future (34% of those asked expressed this view). Growing concerns about exposure to defaults caused by higher interest rates was the biggest worry cited. This risk may be set to temper if the current downward trend on interest rates continues.

However, recent performance and the outlook for the future vary across sub-sectors. While high interest rates are knocking demand in banking, both wealth management and insurance are expected to perform relatively well.

We therefore expect the rate of growth in this sector to remain modest over the next two years.

The slow-growing financial services sector dominates the professional services market, with a 26% share.

3 Pharma & biotech and healthcare

The two small but resilient markets of pharma and healthcare are counterpoints to financial services. Our research shows that organisations in these sectors are particularly confident.

Pharma & biotech:

At US$56bn in 2023, this is the smallest of the sectors we cover, but one that has—with the acknowledged advantage of growing from a smaller base—recently outperformed the wider consulting market. It delivered 14% growth in 2022, topping the table. This figure dipped to 12% in 2023 and is forecast to be around 9% in 2024.

The small but attractive pharma market may still offer opportunities for firms, with demand set to focus on helping companies deliver on their ambitions for growth. Technology will be a key offering, as will operations and risk (including helping pharma clients reshape and secure their critical supply chains).

Healthcare:

The healthcare market totalled US$79bn in 2023 and exhibited a similar pattern to pharma, with growth of just over 7% in 2023, potentially rising to between 8% and 9% over the next two years. This would place healthcare in second place (just above pharma and below energy & resources) in the growth tables.

Spend in this sector is substantially influenced by whether organisations sit within the private or public sector and also varies widely between countries. In the current economic environment, public sector healthcare markets are particularly sensitive to fee rates. Productivity and technology services are most likely to do well here (with technology investment likely more attractive in the private sector).

4 Public sector

This large and important market reached a value of US$132bn in 2023, retaining its position as the fourth-largest sector after financial services, manufacturing, and TMT. Growth in the market totalled just under 8% in 2023, however forecasts for the next two years are less buoyant. The sector is set to underperform the market average in both years, with muted growth of 6% in 2024 and 4% in 2025.

There may be multiple factors behind this, including the shift of some government spend from consulting to defence at a time of global conflict. Also, 2024 is set to be a year of elections, with approaching half of the world’s citizens heading to polling booths. This may signal a pause in embarking on new, longer-term projects as governments transition and take time to consider where they want to invest.

Services that may prove resilient in the sector include risk management and productivity improvement. Technology and cyber services will also be important but probably less so than in the private sector. For more on opportunities in the public sector, see our recent review of this market.

5 Services

The services consulting market demonstrated above market growth between 2021 and 2023 (16%, 12%, and 11% respectively), allowing it to reach a value of US$122bn in 2023. However, this sector is expected to come under more pressure, with growth forecasts of under 6% in 2024 and of 5% in 2025. This reflects how consumers continue to rein in spend in face of inflation, and areas including real estate and business services face multiple headwinds.

Opportunities in this market will coalesce around technology—cyber and data & analytics are likely to continue to be areas of investment. Operational and ESG work should also remain resilient.

 

Overall, growth within the professional services market declined in 2023, down from exceptional double-digit figures following the pandemic. In a patchy market, bright spots are likely to include the energy & resources, healthcare, and pharma markets, and firms would do well to focus on services that help clients deliver on their tech ambitions and revenue goals.