Increasing Investments In Smart Cities And Fast Economic Growth Will Drive The Professional Services Market
The global professional services market is expected to grow from around $6,210 billion in 2019 to nearly $8,082 billion in 2022 at a compound annual growth rate (CAGR) of 9.1%. Rapid growth in investments in smart city projects in many countries globally, aimed at developing modern infrastructure will boost the demand for professional services such as architecture, engineering consultants and related services. Smart city technologies use information and communication technologies to efficiently manage and operate urban services including transportation systems, water supply and law and order. These technologies are enabled through IoT technology. IoT is a convergence of computing devices, mechanical and digital objects. This system facilitates the transfer of data over a network without human interaction and minimal human to computer interaction. Smart city technologies are integrated with electrical and electronic components, benefitting the companies operating in this market. For example, in 2018, APG Algemene Pensioen Groep N.V. announced investments of €250 million in the “Smart City Infrastructure Fund,” for the development of smart city projects across North America, Europe, Australia and other major urban areas in the world. The concept of smart cities is becoming more popular in developing nations, too. For instance, more than 1,000 smart city pilot projects are either ready or are under construction globally and around 500 of these projects are in China.
The global professional services market growth is also aided by stable economic growth forecast for many developed and developing countries. The International Monetary Fund (IMF) predicts that global real Gross Domestic Product (GDP) growth will be 3.7% over 2019 and 2020, and 3.6% from 2021 to 2023. Commodity prices, recovering after a significant decline in the historic period, are further expected to boost market growth. Developed economies are expected to register stable growth during the forecast period, while emerging markets are expected to continue to grow slightly faster than the developed markets. For instance, India’s GDP is expected to grow at 7.3%, whereas China will register GDP growth of 6.2% in 2019.
Developing countries, including India, China, and Brazil, attract investments for engineering, architectural and environmental consulting services. The investments are attracted mainly due to continued economic growth, positive demographic trends, reforms and initiatives by governments, policies inviting foreign investment, and comparatively low-cost human resources. For instance, in 2018, Tata Consultancy Services, one of India’s biggest consulting firms, received a contract worth $2.5 billion from Transamerica, a USA-based insurance company, to enhance the company’s digital capabilities, and simplify the service of more than 10 million policies into a single integrated modern platform. Stable economic growth in developed countries and fast economic growth in developing countries is expected to increase revenues and profits in professional service firms’ end user industries, thus driving the professional services market.