Big changes are forecast in the way people work with data.
A recent Open University survey suggested that in as little as five years 40% of jobs might change fundamentally or even become redundant due to innovation and technology.
Moreover, 90% of the organisations surveyed said their staff lacked the digital skills to cope with the change and almost the same number added that in future staff will have to continually learn new skills, especially in the use of data.
Matthew Bayfield, Parity PLC’s (LON:PTY) chief executive, also believes this is where the workplace is heading.
He has carried out a root and branch overhaul of the tech-focused recruitment and consultancy business to capitalise on this data revolution.
What is happening is similar to the digital revolution of fifteen years ago, he told Proactive.
“It’s inconceivable that someone would go for a job interview now and say they did not know what the internet is.
“We’ve reached a similar point in data. Every business function needs to ‘get it’.”
Integration of the skillset required to analyse data effectively will flow through the business, he adds.
Marketing, finance, operations - all divisions will have to track and more importantly really understand how the data can help a business.
Bayfield is positioning Parity to be there to help with this ‘data upskilling’.
One customer, he says as an example, has a large marketing team with completely different levels of data literacy.
“We have programmes to bring them up to the level where they are comfortable and relaxed to talk about whether, for example, a sales promotion worked and its return on investment.
“That help is extremely attractive for companies.”
Investors will be aware that Parity has had plenty of reboots already, but Bayfield is convinced he is on the right track.
Traditionally, the business comprised two sides: recruitment and consulting, but these have now been brought together under the one banner of account management.
Bayfield says the way the company was structured previously meant customers bought one product, now they can be offered three through a single client-focused account manager.
If an organisation needs a new member of staff, Parity can still do the recruitment/contractor provision but, alternatively, it can train up the existing staff or even do the job itself to completely de-risk the project.
150 active customers
Currently, Parity has about 150 active customers of which 125 are only using a recruitment package.
Relationship management is critical, he adds, as these are the people who talk to the clients and the more time they spend with them, the more they value the service.
Bayfield is backing his ideas with some hefty investment.
Some £750,000 has been set aside for investment in new hires, technology and the creation of a sales and marketing function – the company’s first.
Recruitment services are approaching an’ Uber’ moment, he believes, something that the advent of artificial intelligence will only accelerate.
“We want to be on the right side of the curve when that happens,” he adds, with a streamlined, automated service.
Net profit margins key
Up to now, recruitment contributed the bulk of revenue but, with wafer-thin margins, has made little in the way of profits.
Consulting has low revenues but good margins.
Going forward, Bayfield’s focus will be to get the group’s overall net profit higher through a more profitable mix of services.
“It’s all about net profit margin,” he says.
That might mean the revenue line goes down– but the blend will be more consulting focused rather than contracting/body shopping.
Using the pool of talented people on its books to its best advantage will be another factor.
“The way people prefer to work is changing,” he adds.
“Skilled IT people want to be in teams on projects, not in roles in companies.”
“They recognise they are massively in demand and want to get value for themselves from the projects they are involved with.
“Through Parity, they can be part of a community of experts, where we can be a conduit to good projects”.
Re-rating to follow reorganisation
Broker WH Ireland expects this year’s financial numbers to reflect the changes in the business with underlying profits dropping to around £500,000 in the current year before recovering to £1.5mln in 2020.
That estimate is based on revenues of £65mln compared to £86mln last year and a forecast of £80mln in the current twelve months to December.
Bayfield says the five-year ambition is for the net profit margin to rise from 1% to the low teens and get the company rated in line with other consultancies.
Currently, Parity is valued at just £7.9mln at 7.7p per share, which if it hits its targets would be about one year’s profits.
Bayfield is in no doubt that rating will change as margins improve.
“If we achieve that and are re-rated as a consultancy, the market cap and valuation will be very different.”