COVID-19 is making it tough out there for clients

COVID-19 has significantly affected how many organisations operate and the services and products they offer. To help professionals services firms better understand the impact that COVID-19 is having on clients, during September 2020 beaton conducted a survey of these clients. Our purpose was to understand the extent of the adverse impacts of the COVID-19 pandemic and to learn which segments of their clients are being most affected. The survey covered clients of firms delivering services in Accounting and consulting, Built and natural environment, and in Legal and related fields. We present some highlights of the findings in this post.

We asked clients to indicate the level of impact that COVID-19 was having on their organisation. At least 70% of clients in each of the three professions indicated some level of negative COVID-19 impact. Furthermore, at least 40% of clients said that COVID-19 had had a moderate to large negative impact on their organisation (Figure 1). The implications are that for many professional services firms, not only is a large proportion of their total client base being adversely affected by COVID-19, but a large proportion of their total client base are facing significant challenges that require external advice/expertise to manage. On the other hand, one-fifth to one-quarter of clients report a positive or no impact.

How-professional-services-firms-can-better-support-their-clients-affected-by-COVID-19-2

Figure 1 – Impact of COVID-19 on clients

If we segment the positively and negatively affected clients by demographics, we get a better idea of where COVID-19 is causing the most impact. When we break impact down by location and look at Australia first, we see that Victoria is overrepresented in the “Negative impact” group (Figure 2). This is not unexpected given that Victoria needed a very long second lockdown to control COVID-19. This is in contrast to locations like Western Australia and South Australia which are both over-represented in the “Positive or no impact” group, and have been relatively more successful in avoiding a second wave – at least so far. However, even with only Victoria requiring a second lockdown, the Australian economy recorded a 7% fall in GDP for the June quarter, a record fall since quarterly measurement began in 1959.

COVID-19 is making it tough out there for clients

Figure 2 – Impact by Location – Australia

Figure 3 shows the same segmentation for clients in New Zealand. Figure 3 shows that Auckland is over-represented in the “Negative impact” group. This reflects Auckland re-entering Level 3 restrictions on August 12th, while the rest of New Zealand was starting to ease restrictions. With Auckland accounting for approximately 37% of New Zealand’s GDP, and with New Zealand’s GDP having a record fall of 12.2% for the June quarter, New Zealand’s “go hard, go early” strategy has been costly. But with life in New Zealand starting to return to normal, it is essential for New Zealand’s full economic emergence from COVID-19 that it avoids any further COVID-19 clusters.

COVID-19 is making it tough out there for clients

Figure 3 – Impact by Location – New Zealand

Interestingly, when we segment impact by the size of a client’s revenue we see that larger organisations are over-represented in the “Negative impact” group. This reflects data from the Australian Bureau of Statistics (ABS) that indicates that larger organisations are more likely to have modified their operations, and more likely to have reported a decrease in their number of employees. At least a partial explanation is that in Australia and New Zealand large organisations have been less eligible for some Government financial support schemes than SMEs.

COVID-19 is making it tough out there for clients

Figure 4 – Impact by Firm Revenue

Figure 5 shows impact segmented by Sector. We see that it is sectors that rely more on a physical presence, like “Construction & infrastructure”, “Property”, and “Mining & resources, Oil & gas”, which are relatively more adversely affected by COVID-19. The negative impact on “Construction & infrastructure” explains why the Australian and New Zealand governments are to some degree endeavouring to build their way out of the COVID-19 recession and have announced large infrastructure investments ($7.3billion infrastructure spending boost in Australia; $3billion infrastructure spending boost in New Zealand). Conversely, it is the Professional services sector that is relatively over-represented in the “Positive or no impact” group. With 60% of businesses seeking external advice for help with COVID-19 this has helped professional services firms better navigate COVID-19.

COVID-19 is making it tough out there for clients

Figure 5 – Impact by Sector

Overall we see that the effects of COVID-19 have been widespread, with large swathes of professional services clients being affected. Lockdowns have caused key economic centres in Australia and New Zealand to experience extended or additional lockdowns. Both countries have experienced record GDP falls, and important sectors have been hard hit. As such, while certain locations and segments have fared slightly better than others, the overall impact and uncertainty caused by COVID-19 is leaving few untouched.

At least 40% of clients said that COVID-19 had had a moderate to large negative impact on their organisation

Twitter
LinkedIn
WhatsApp
Email

The corresponding post type is disabled. Please make sure to 1) install The7 Elements plugin under The7 > Plugins and 2) enable desired post types under The7 > My The7, in the Settings section.