Efficacy of technology deployment is reflected in an often-missed financial metric: revenue per employee

The recently published HFS Horizons: Life Science Service Providers, 2023 study indicated a significant improvement in the sophistication of solutions and services developed by service providers. Yet, paradoxically, service providers’ internal deployment of technology and resources to deliver their solutions does not reflect these sophisticated capabilities.

• Adoption of emerging tech: Over the last decade, we have seen an unprecedented proliferation of new technologies, including cloud, augmented and virtual reality, artificial intelligence (AI), blockchain, and generative AI. While the adoption of these technologies has varied across industries and applied to different problems, many of them have become foundational to enterprises, driving improved productivity and new value, such as speed to market for drugs.
• Eating your dog food: Service providers of all heritages (IT services, consulting, domain-specific, business process outsourcers), sizes (revenues, headcount), and specializations have been at the forefront of adopting emerging tech to enhance their offerings to deliver lower-cost services, better experiences, and, in healthcare and life sciences, improved health outcomes via the triple aim of care. Yet, that same imagination and sophistication have not always been applied to their solutions’ delivery efficiencies or resource deployment.
• Leaving dollars on the table: Consequently, it is likely that service providers are not as efficient (see Exhibit 1) as they can be despite their understanding of the potential of technologies and their experience applying them smartly for their life sciences clients.

The Bottom Line: Increased adoption of technologies typically improves productivity and should be reflected in the revenues generated per employee.

While most service providers have shown top-line growth in their life sciences business, the quality of that growth is muted, given their revenue per employee metrics have declined or remained flat.