Comment: Resilience and digital transformation drive growth despite market challenges

The resilience, positivity and determination amongst architecture and engineering (A&E) firms, has been outstanding, despite challenging market conditions. 73 per cent of A&E firms in the UK and Ireland say that, compared to 2022, they are expecting to increase profits in 2023, placing an emphasis on digital transformation as a crucial driver. Without digital transformation, almost three out of four (74 per cent) A&E respondents cited they had concerns about losing market share within two years.

To better understand emerging trends and market challenges in architecture, engineering, and consultancy firms, Deltek conducted its 4^th Annual Clarity EMEA and APAC Industry Study. The report reveals the perspectives, challenges, and opportunities of project-based businesses, which in turn, reveals how firms can realise growth, embrace digital transformation, find essential talent, and develop their environmental, social and governance (ESG) commitments.

Transformation for growth

The defining business challenge of our time has been the way in which organisations navigate digital transformation. Digital and AI (Artificial Intelligence) have enabled businesses to take a more strategic approach to technology across the business, saving time, reducing costs, and revolutionising manual operations. With new technologies continuously emerging and evolving, companies need to be prepared to innovate and meet the challenge.

Looking at architecture and engineering firms specifically, business leaders are ready to realise their digital ambitions. Over 2023, 82 per cent of A&E businesses are planning to increase their investments in emerging technologies. Data science (88 per cent), big data (86 per cent), artificial intelligence (AI) (86 per cent), and robotic process automation (85 per cent) are all believed to be crucial for success – showing the appetite the industry has for digital transformation. However, before companies can embrace these technologies, they first need to invest in their teams to ensure they have the right capabilities to innovate and execute.

For instance, 89 per cent of firms remain reliant on manual data entry for a project’s financial data which is potentially why (53 per cent) more than half of the companies say their ability to adopt AI is a top challenge for project management in 2023. Despite the technology being available, skills and expertise to unlock these capabilities need to be developed within businesses for a strong baseline of digital competence.

Tackling the talent crisis

Although employee turnover is steadying, almost every UK and Irish A&E business continues to grapple with endless challenges when it comes to finding and retaining talent. 72 per cent of firms intend to expand their workforce this year, yet the rising costs of hiring makes it extremely difficult to attract new talent, while also meeting the needs of existing staff.

To combat intense competition for talent, firms need to take a more strategic approach to attracting and retaining employees, an approach that is embedded in understanding the wants and needs of the modern workforce. To win the war for talent, firms must invest in creating a company culture that not only empowers employees but enables them to feel connected to their role and wider team.

And we are seeing firms take action here. There is a strong focus on offering employees’ opportunities for upskilling, training and career development especially as technological literacy continues to become core to every role.

Implementing visible career development plans engages talented employees and can help retain staff members who are seeking long-term professional development opportunities. Taking a proactive approach to team development enables firms to not only retain talent, but also engage a more diverse pool of candidates and employees.

Furthermore, investment into digital and AI requires an unparalleled level of commitment from the entire organisation, to maximise value. All or any of these technologies can only create huge opportunities so far as companies are willing to develop and invest in a continuous learning culture for optimal user adoption and experience.

Firms investing in DE&I

It is important to remember that enhancing the employee experience goes beyond career development and the projects they work on. It includes their perception of the organisation in which they work. This is where strong internal diversity, equity, inclusion (DE&I) and ESG programmes play a crucial role.

In terms of DE&I, a significant proportion of architecture and engineering firms (43 per cent have already implemented DE&I initiatives that include specific goals. Plus, there is a further who are actively developing practices and policies related to DE&I, albeit without a formal strategy in place. When it comes to ESG, companies are recognising the importance of a responsible business. The research found that over half (64 per cent) of firms agree that social responsibility and profitability should be at least equally important to their company. Today, having a strong social responsibility is inextricably linked to a company's ability to remain competitive, hire top talent and maintain profits in the long term.

Heading into the second half of 2023, the focus will be about rewiring the journey. The battle for talent will continue to be intensive, but firms that focus on connecting technology directly into the centre of a differentiated future alongside providing excellent training and career development for optimal user adoption and prioritising investments in meaningful DE&I will thrive. Optimism remains strong in the industry, and I am excited to see how these digital ambitions will evolve and allow organisations to capture their full potential in the months and years ahead.

Neil Davidson, group vice president, EMEA and APAC, Deltek