SAN FRANCISCO--(BUSINESS WIRE)--According to SPI Research, the leading independent technology services research firm, 2014 was a Goldilocks year for professional services organizations (PSOs) because incremental growth, productivity and profit enhancements combined to deliver results that were not too hot, not too cold, but just right. The 2015 Professional Services Maturity™ Benchmark revealed industry growth of more than 10 percent for the third consecutive year.
Highlights from this year’s benchmark
- Steady growth: Annual revenue growth (10%), headcount increases (8.1%), and larger project backlogs delivered steady, consistent and manageable growth.
- Productivity improvements: Nearly all professional services organizations experienced significant improvement in revenue per consultant ($197K v. $193K) and revenue per employee ($167K v. $155K) due to moderate increases in billable utilization (71% v. 70%) and the percentage of the workforce that was billable (75.1% v. 71.2%).
- Talent management the top challenge: Firms struggled to find and develop the talent they needed to sustain their growth. Attrition rose for the fifth year in a row to 8.9% versus 8.3% last year and will likely continue to rise as consulting demand outstrips supply.
- Sales effectiveness still difficult but improving: Although consistently a top challenge, sales metrics improved with larger sales pipelines and shorter sales cycles adding up to more firms reaching their revenue targets.
- Profits up: Embedded service organizations (software, SaaS and hardware) delivered exceptionally strong performance with net contribution margin increasing to 19 percent from 15.4 percent in 2013. Profits grew in all vertical markets and all geographies. Europe, Middle East and Africa (EMEA) posted the best geographic profit progression from 12.7 percent in 2013 to 15.5 percent in 2014.
Using information that’s typically confidential such as detailed bill rates and compensation, the 190-page report analyzes 200 key performance metrics and includes 235 supporting charts and graphs. It reveals income statements and expense ratios for eight professional service (PS) vertical markets including accounting, advertising/marketing, architecture/engineering, IT consulting, management consulting, software, SaaS, and hardware and network consulting.
“I look forward to this report every year. SPI Research seems remarkable in their ability to stay ahead of the trends that affect PS with insights that are specific to the path we are on. Their analysis is chock full of relevant detail that is actionable in our business. I recommend this to anyone in the professional services or enterprise software markets.”
Mike Alsup, Senior Vice President, Gimmal
About Service Performance Insight
Service Performance Insight is a global research, consulting and training company dedicated to helping professional service organizations make quantum improvements in productivity and profit. In 2007, SPI developed the PS Maturity Model as a strategic planning and management framework which has become the industry-leading performance improvement tool used by over 10,000 service and project-oriented organizations to chart their course to services excellence.