2025 Professional Services Benchmarks

2025 is fast shaping up to be a crucial year for the professional services industry. Services firms aren’t just caught between challenges like an increasingly competitive global market and rapidly evolving client expectations. They must also effectively navigate growing pressures to improve operational efficiency, automation and profitability.

Each year, we sponsor the SPI Professional Services Maturity™ Benchmark Report, a comprehensive survey of thousands of professional services organizations. This year’s report highlights some significant areas of concern for professional services organizations and insights into how top performers achieve their results based on a framework focused on key areas like leadership, client relationships, and service execution. In this blog, we’ll discuss how 2024 affected the professional services industry and how to make 2025 a success with actionable insights.

How the Professional Services Landscape Changed Last Year

It is no secret that the unpredictability of 2024 deeply affected the professional services industry as a whole. This is clearly borne out by this year’s 2025 Professional Services Maturity™ Benchmark. SPI’s report indicates that issues, such as regulatory shifts, and economic volatility, resulted in firms experiencing challenges such as:

• A 4.6% decline in revenue growth year-on-year, which is well below the five-year average of 8.7%.
• EBITDA fell to 9.8% in 2024 from 15.4% in 2023, which is the lowest it has been in 5 years.
• Billable utilization also experienced a setback, falling to just 68.9%, below the 75% optimal threshold mark.

Numbers like these do paint a concerning picture. However, they also provide invaluable insight into the areas ripe for transformation and improvement. In fact, despite the downturn in several areas, services firms noted an 8% increase in the deal pipeline, highlighting the considerable potential that remains untapped. These numbers are also indicative of broader trends that have been shaping the professional services landscape over the last five years.

2024: A Culmination of Five-Year Trends

The metrics witnessed in 2024 are not the result of an isolated incident. In fact, the last five years have seen the professional services industry experience seismic shifts due to changing market dynamics, technological progress, and global macroeconomic disruptions, among other factors. The impact is particularly noticeable in six key areas, as discussed below.

1. Slowing Revenue Growth

Revenue growth shrank to just 4.6% in 2024, the lowest it has been in five years, dropping from a high of 10.6% in 2021. This stark contrast reflects broader challenges, such as the global economic slowdown and shifting client priorities that have resulted in reduced client spending. The increasingly cautious client base has affected firms, which find themselves mired in longer sales cycles and delayed decision-making.

However, despite the fall in revenue and growth, backlog health remains strong. In 2024, the forecast for quarterly bookings reached 166%, which indicates that client appetite has not dissipated. Nonetheless, the challenge remains for services firms to manage and convert these potential deals into tangible revenue efficiently. Firms need to shift gears, adapt, and reassess their execution and delivery strategies to overcome the degradation in service delivery as illustrated below.

2. Rising Operational Inefficiencies

Further complicating the growth of professional services firms is the growing operational inefficiencies. Billable utilization and project delivery, both of which are critical to sustainable profitability, have undergone significant declines in the last five years. Billable utilization, particularly, has been on a steady downward trend, from a high of 73.2% in 2021 to just 68.9% in 2024, as seen in the graph below. This trend is particularly concerning for firms as any dip in utilization rates below the 75% threshold impacts their ability to maximize their workforce’s revenue potential. The decline in utilization rates has directly affected the revenue per consultant, which fell to $199K in 2024. Left unchecked, this will result in lower margins and significant financial instability for firms.

Similarly, as seen in the chart above, on-time project delivery rates are down to just 73.4% in 2024 from 80.2% in 2021, further highlighting the operational inefficiencies affecting professional services firms. This is particularly indicative of poor resource management and execution practices. Additionally, late deliveries harm more than just client satisfaction and retention rates. They also disrupt revenue recognition, which causes financial unpredictability and results in scope creep that ends up impacting other engagements.

3. Evolving Talent Dynamics

With human capital being the key driver of success in the professional services industry, firms must carefully balance talent retention, operational efficiency, and workforce efficiency. However, recent trends have threatened to throw this delicate balance into disarray. In 2024, attrition rates fell slightly from the five-year average of 12.8% to 11.7%. Despite the relative stability of attrition rates, professional services firms have been experiencing a staggering decline in headcount growth, which fell to 1.9% in 2024 from 5.2% in 2023. This stark difference underscores the difficulties firms face in growing their workforce, primarily due to ongoing talent shortages and hiring freezes. It also highlights the more cautious approach to workforce expansion in the face of economic uncertainty.

To fill the gaps caused by this slowdown in full-time hiring processes, firms have shifted their focus to subcontractors and third-party providers. In fact, subcontractor contributions to revenue grew to 10.9% as firms turned to more flexible staffing solutions. However, this is still below the 10-year average of 11.2%, albeit only by a slight margin. This indicates that while firms are leaning towards flexible solutions like hybrid workforce models, they are still trying to optimize their balance between full-time hires and external talent support.

4. Changing Client Relationship Dynamics

The increasingly cost-conscious nature of today’s professional services landscape has shifted the dynamics of client relationships. The traditional model, in which firms rely on new clients to drive growth, has become more challenging. The percentage of new clients that firms attracted in 2024 fell to 29.3% from 31.3% in 2023. While the decline is seemingly marginal, it indicates a more significant tightening in the market as clients seek to exercise greater caution. Additionally, the economic uncertainty and budget constraints make it more likely for clients to favor existing relationships over new ones. As a result, client retention and account expansion are becoming more critical as key revenue drivers while being more efficient in the current market as well.

Unfortunately, declining client satisfaction metrics indicate that firms have an uphill battle ahead as service quality becomes a growing concern. Project overruns rose to 11.3% in 2024, a slight increase from 9.6% in 2023. This suggests potential inefficiencies in project execution and resource management. Issues such as scope creep and budget overruns can lead to unhappy clients and damaged trust, which make it more difficult for firms to secure referrals and repeat business.

5. Falling Profitability and Margins

Given the magnitude and complexity of challenges in the industry at large, it comes as no great surprise that profitability and margins are under significant pressure. In fact, the profitability trends paint a bleak picture. The highest EBITDA reached in the last five years was 16.1% in 2022, but that has plummeted to just 9.8% in 2024, the lowest in the same period. Ongoing operational inefficiencies, growing administrative overheads, and rising labor costs continue to affect financial performance.

Interestingly, despite the profitability struggles, project margins have remained relatively stable over the last five years at an average of 35%, with a minor uptick at 35.9% in 2024. This suggests that firms still retain the ability to deliver profitable projects as long as execution is managed well. Nonetheless, the difficulty in converting project profitability to overall business success underscores the deep-rooted issues at play. This includes problems like delivery inefficiencies, poor overhead management, and ineffective talent management. Given these issues, firms are unable to leverage their strengths and drive profitability.

6. Growing AI Adoption and Tech Innovations

Artificial intelligence (AI) has quickly become a key differentiating factor for professional services firms, as many predicted it would be. It is no longer a future possibility but rather something that brings tangible results to the table. In 2024, early adopters of AI and AI-powered solutions demonstrated noticeable improvements in resource management and client engagement outcomes. The 2025 Professional Services Maturity™ Benchmark from SPI notes a strong correlation between firms whose leadership supports Gen AI adoption and the percentage of winning bids. It is quite likely that firms willing to adopt and integrate AI into their strategy widely will achieve a strong competitive advantage in the coming years.

Similarly, professional services firms have embraced solutions, such as PSA, ERP, and CRM, to enhance their business processes. Such solutions have been instrumental in ensuring firms’ improved performance levels. However, the lack of seamless integration between these systems prevents firms from unlocking their full value. The siloed approach leads to issues like limited real-time visibility, inefficient workflows, and lack of proactive decision-making, all of which hurt the bottom line in the long run.

The Strategic Focus Areas for Professional Services in 2025

While the numbers presented earlier paint a bleak picture, professional services firms must take heart in their ability to adapt and evolve. Moreover, with the availability of emerging technologies like AI and Gen AI, the potential for transformation has never been more significant. Leveraging AI can help firms develop and implement new strategies to optimize resource management, enhance client engagement, and drive efficiency. When supported by data-driven decision-making, AI can help unlock sustainable growth while prioritizing talent development, operational excellence, and client-centric innovation.

Renewing Focus on Conversion

While having a robust deal pipeline is excellent, it makes little difference unless firms can effectively generate revenue from those opportunities. From ensuring seamless project handoffs by streamlining sales to delivery workflows to improving win rations by refining value propositions and pricing strategies, there are viable strategies available to firms. Of course, AI-powered solutions can be a tremendous differentiator through capabilities like predictive analytics that help firms prioritize the right opportunities.

Improving Client Relationships

There is no denying the need for firms to double down on client relationships and retention, especially given the decline in client acquisition rates. Firms must adopt a client-first approach that prioritizes greater project visibility and more transparent communication with clients. A more robust array of value-added services can also help deepen client relationships while opening the door for cross-selling opportunities. Professional services firms can also leverage AI-powered tools to help them proactively identify potential client concerns while personalizing engagement.

Strengthening Talent and Workforce

Workforce sustainability is undoubtedly under strain, with firms struggling with global talent shortages and hiring freezes. Given the importance of talent in professional services, firms must rethink their workforce strategies to remain competitive. A clear focus on talent retention and upskilling is a must. Expanding on flexible workforce models can help firms scale their workforce capacity to meet demand. Firms can also leverage AI-powered solutions to build a robust talent pipeline, automate training and upskilling processes, and more.

Optimizing Billable Utilization

As it directly impacts revenue and profitability, billable utilization must be a key focus area for firms. This not only requires a reassessment of current resource management practices but also a strategic adoption of AI and other solutions to eliminate inefficiencies in workforce deployment. A comprehensive time-tracking solution is the key to maximizing resource utilization. A system like Deltek | Replicon can improve utilization rates by providing detailed time tracking capabilities that allow businesses to accurately monitor how their employees are spending their time across projects, tasks, and clients, enabling them to identify areas where resources are underutilized or overallocated, thus optimizing workforce allocation and maximizing billable hours. Leveraging a tightly integrated ecosystem of PSA, CRM, ERP and AI-powered solutions can help firms ensure accurate skills-to-project alignment, improve demand forecasting, balance workload distribution and more. As you can see below, the firms with more maturity and visibility into their resourcing achieve a much higher utilization rate (over 80%!)

Adopting AI-Driven Solutions

Advancements in technologies such as AI and Generative AI have significant potential for transformation across the board. As you can see from the chart below, professional services organizations are looking to use AI to increase efficiency, reduce costs and innovate services offerings. Adopting these technologies can pave the way for streamlined operations, greater client value, and exceptional delivery. However, technology adoption must be tempered with data-driven decisions that help firms enhance the key service pillars of their businesses, such as talent development, project management, and more.

The Path to Sustainable Growth

To grab hold of a more prosperous future, firms need to take decisive action backed by actionable data and insights. By identifying and investing in the proper service areas and solutions, firms can achieve stability amid uncertainty and become more resilient and sustainable in the long run. An effective way to navigate this process is by leveraging benchmarks. Benchmarking allows firms to understand where they are positioned against the best-performing firms in the industry and identify areas where they need to improve.

The SPI 2025 Professional Services Maturity™ Benchmark Report provides a comprehensive picture of the state of professional services today while taking a deep dive into various metrics and data sourced from thousands of firms. Get your copy of the report and discover how your firm can position itself as a leader in professional services.