Author: Doug Johnstone, Principal Consultant at Digital Pivot
Date: January 2025
Outline
- Why thoughtfully diversifying your service portfolio is essential for long-term growth
- How to evaluate current offerings and identify emerging client needs
- Defining clear strategic objectives for diversification (e.g., new verticals, delivery models, managed services, product-led services)
- Mapping new or enhanced service options to client value chains and desired outcomes
- Conducting rapid testing and market validation before full-scale rollout
- Building flexible operational and delivery models to support diversified services
- Equipping sales and delivery teams with updated value propositions and collateral
- Monitoring early indicators of traction—pipeline, conversion rates, client feedback
- Iterating quickly based on performance and feedback loops to refine services
Authors Note
Years ago, while working with a fast‑growing IT services firm in Auckland, I saw first‑hand how relying too heavily on a single service line can limit both growth and resilience. The company had built its reputation on infrastructure support, but as market demand shifted toward cloud services and consulting, they struggled to adapt. By helping them diversify their portfolio – carefully expanding into managed services and advisory offerings – we not only stabilised their revenue but also unlocked new streams of growth. That experience showed me that portfolio diversification is not just about adding services, it is about future‑proofing your business.
Key Takeaways
Service portfolio diversification enables IT services, Consulting and Professional Service firms to reduce risk, increase revenue, and stay competitive in a changing market.
Outline
- Diversification reduces risk and ensures IT services firms stay competitive.
- Assess your current portfolio to identify strengths, gaps, and growth opportunities.
- Align new services with customer needs and long‑term business goals.
- Build capability and create a clear go‑to‑market strategy for new offerings.
- Track performance, measure profitability, and refine services for sustained growth.
Why Diversification Is No Longer Optional
Many Professional Services providers rely too heavily on a narrow set of offerings — often rooted in legacy services. But as technology adoption accelerates, buyer needs evolve and margin pressure increases.
In this rapidly changing market Professional Services firms need to:
- Identify high-growth adjacent service areas
- Retire or evolve stagnant legacy offerings
- Design bundled solutions aligned to current client challenges
- Use a research-led approach to validate demand before launch
A diversified service portfolio not only protects against market shifts — it positions you as a long-term partner to your clients.
How to get started with your Diversification Roadmap
In today’s rapidly evolving Professional services landscape, service providers face increasing pressure to adapt to changing customer needs. Many businesses experience declining demand for traditional offerings due to market saturation, commoditisation, or shifts in technology. Service portfolio diversification is a strategic approach that allows IT service providers to expand into growth markets, generate new revenue streams, and differentiate from competitors.
This guide outlines a structured approach to diversifying your service portfolio, ensuring that your organisation remains competitive and aligned with evolving market demands.
Step 1: Conduct Market Research and Identify Opportunities
Understanding Market Trends
- Analyse industry reports, analyst insights, and market forecasts to identify emerging trends.
- Leverage competitive analysis to understand gaps in your competitors’ offerings.
- Use customer feedback and surveys to pinpoint unmet needs.
Step 2: Assess Organisational Capabilities and Readiness
Internal Capability Audit
- Evaluate current technical expertise, service delivery processes, and internal IP.
- Identify gaps in skills, technology, and resources needed for new service offerings.
- Assess scalability and operational feasibility of introducing new services.
Step 3: Define the New Service Offering
Positioning and Value Proposition
- Clearly articulate the problem your new service solves.
- Define your Unique Selling Proposition (USP) and key differentiators.
- Develop messaging that connects with customer pain points and commercial needs.
Step 4: Develop Sales and Marketing Assets
Creating Sales Enablement Materials
- Sales Playbook: Guides for sales teams on positioning, objection handling, and pricing.
- Pitch Decks: Tailored presentations for different buyer personas.
- Case Studies: Success stories to build credibility.
Step 5: Execute the Go-to-Market Strategy
Aligning Sales and Marketing Teams
- Conduct internal enablement sessions to ensure alignment on messaging and positioning.
- Provide tools and training for sales teams to effectively communicate value.
Step 6: Measure, Iterate, and Scale
Performance Metrics
- Track sales conversion rates, customer acquisition cost (CAC), and customer lifetime value (CLV).
- Monitor customer feedback and adjust offerings based on evolving needs.
- Evaluate revenue impact and scalability potential.
Conclusion: A Roadmap to Growth and Competitive Advantage
Service portfolio diversification is not just a defensive strategy against declining demand—it’s a proactive approach to unlocking new revenue streams and strengthening market positioning. By following this structured roadmap, IT service providers can successfully pivot their core offerings, align with customer needs, and drive long-term business success.
For expert guidance on executing your Portfolio Diversification, reach out to Digital Pivot today.
For more information, contact us
Key steps to pivoting your offerings into growth markets: