The last two years saw a boom in virtual service providers, as companies sought ways of taking their operations online. Those that had started operating before 2020 suddenly found an enormous market open to them; and entrepreneurs rapidly started new companies during the pandemic itself to take advantage of the demand.

But even while fast paced industry growth will continue, the present large selection of vendors may narrow before long.

“I think unless the emerging players bring the right capabilities to the market, they may end up going out of business,” commented Yannis Niebelschütz, co-founder and CEO of digital coaching provider CoachHub. Founded in 2018, CoachHub itself already had a considerable lead in the market before the pandemic, and it is currently the top coaching provider in Europe and one of the largest global providers worldwide.

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Players will continue to emerge, he told People Matters in an exclusive conversation. But it's hard to compete for the biggest customers, especially the multinationals that operate across a range of markets and cultures. These tend to prefer a provider that can match them in more than one location – and they are also the customers that tend to make the most use of such services over the long term, which is good news for providers that can meet their needs and not so good news for the smaller players.

“If you look at the landscape for larger organisations, those with several thousand employees, there are not many companies out there with the capability to support them,” Niebelschütz observed. That, he believes, points towards massive opportunities for digital coaching companies and at the same time makes it imperative for emerging players to develop their capabilities. 

There are a few barriers to scaling to that level, he explained. Service providers need to have the infrastructure in place to match an enterprise company's requirements. And it's not just the technological infrastructure. A certain level of legal and compliance capabilities is needed just to qualify the vendor to handle employee data. On top of that, the nature of coaching often means that confidential information is involved, which requires an entire additional level of regulatory compliance and data security.

“If you cannot comply with all these things as a platform – you are out of the running,” Niebelschütz said.

Industry players that cannot scale by themselves do have the option of partnerships, he suggested, pointing to CoachHub's own recent acquisitions of Austrian platform Klaiton and French market leader MoovOne. But that's not to say that every entrepreneur with a digital coaching solution will be able to take that route.

“An organisation needs to have a certain revenue level and maturity level in order to appear on somebody's radar as a potential acquisition target,” he pointed out. “I think many of the smaller players need to strive to meet the criteria that the big players are looking for.”

Because of this, Niebelschütz feels that growth in the industry is most likely to be organic going forward, at least for the larger companies like his. But he also believes organic growth is not a limitation, simply because the present work landscape places so much emphasis on people centricity.

“The demand for a people-oriented way to grow your most valuable asset, your people, will only increase,” he said. “Watch the space. Coaching is no longer just for the leadership and the middle management. We may see more strategies emerging in the next couple of years to also support individuals on a broader scale, and that's where the growth will be.”