Professional Services: Shifting Needs
Villamil says even in a downturn, companies must spend, but their needs and priorities shift. Hardest hit may be IT consulting, accounting and engineering firms, as companies delay big-ticket purchases, expansions and acquisitions. Less vulnerable will be law firms, particularly those that handle bankruptcies, labor issues and loan refinancing. "Demand (for legal services) should remain strong in 2002, but the focus will change," says Jay B. Shapiro, managing partner of the statewide law firm Stearns Weaver Miller.
Employee leasing -- sometimes called flexible staffing -- is expected to fare relatively well, especially companies that offer payroll management and employee-benefit services. "In tough times, companies are always looking to go outside to improve efficiencies," says Villamil.
Laura Browder, an analyst with A.G. Edwards, says employee leasing firms may be among the first to benefit when the recovery begins. "When the economy picks up, sometime in 2002, companies will be cautious about hiring full-time people, but flexible staffing will allow them to expand without taking on a long-term commitment."
U.S. companies typically spend between 5% and 15% of their annual operating budgets on security, with drug firms and companies involved in research and development spending up to 25%.
Since September's terrorist attacks, demand for corporate security services has skyrocketed. "Before Sept. 11, we'd offer a prospective client a menu of 10 security options, and typically they would pick the top three and forgo the others," says Fort Lauderdale-based security consultant Wayne Black. "Now they take all 10 and say 'are you sure that's going to be enough?' "
Security Concerns: Professional services companies rely heavily on secure data storage and transmission. Some security analysts say the next assault on America could take the form of "cyber-terrorism," including wide-scale hacking of corporate targets.
Company to Watch: Jacksonville-based staffing service provider Modis Professional Services, which expanded rapidly during the 1990s, saw its third-quarter profit drop 99% in 2001. Officials hope a new corporate structure -- independent operating units -- will help it remain nimble in a weakened economy.
Well-positioned: Among professional service providers, security consultants once were an afterthought. Now, businesses value them as much as their lawyers and accountants. One of the nation's best is the Ackerman Group, a small Miami-Dade-based company that provides risk analysis, hostage recovery, counterterrorism planning and other security services to a host of well-heeled business clients.
Vital Statistic: Florida is a hotbed of professional employer organizations (PEOs), which combine staff leasing with other employee-management services. Last year, more than one-third of all PEO business volume nationally was generated by Florida-based companies.