The report revealed that, after a banner year in 2022, firms are optimistic and expect another year of strong growth. However, even with continued growth and strong pipelines, the industry is still facing challenges, particularly when it comes to attracting and retaining talent, combined with increasing labor costs and rising inflation.

Key findings include:

• Firms expect strong growth despite challenges: After a successful year in 2022, firms are optimistic about another year of robust growth. However, attracting and retaining talent, along with increasing labor costs and rising inflation, remain significant challenges.

• Growth projection and increased profitability: Firms anticipate a 10.2% net revenue growth in 2023, compared to a previous rate of 17.6%. Additionally, there has been a notable increase of 5.6 percentage points in operating profit on net revenue year-over-year.

• Technology as a transformative factor: Technology plays a pivotal role in addressing challenges and providing a competitive advantage. Firms anticipate a significant advancement in digital maturity over the next five years, with 82% aiming to reach the “advanced or mature” stages of digital transformation (compared to 69% in the previous year). Two-thirds of respondents prioritize creating strategic technology implementation plans to align business strategies with IT.

• Cybersecurity and IT infrastructure challenges: Cybersecurity emerges as a top concern, with over one-third of A&E firms identifying it as their primary challenge. Implementing new security policies and procedures is a key priority for addressing IT operational challenges. Additionally, firms encounter difficulties in migrating operations to the cloud and managing existing legacy systems.

• Staffing shortages and competition: Despite a doubling of staff growth, staffing shortages persist as the primary challenge for A&E firms in the next three years. Firms struggle to fill positions and onboard talent at a pace that meets demand. Moreover, candidate competition is a growing concern for attracting and retaining skilled professionals.

• Strategic pursuit planning and client relationship nurturing: Firms anticipate strong growth based on forecasts and are adopting a more selective approach in project pursuits, considering capacity and profitability. The report highlights that nurturing client relationships is a significant challenge for nearly 70% of respondents.

Gain comprehensive insights into the industry’s performance and emerging trends by accessing the complete study here