The Hackett Group® Finds SG&A Costs at a Five-Year High as 62% of US Companies Struggle to Control Spending Amid Slowing Revenue Growth
The Hackett Group® Finds SG&A Costs at a Five-Year High as 62% of US Companies Struggle to Control Spending Amid Slowing Revenue Growth
Median SG&A cost ratio rose to 14.3%; leaders are turning to AI and agentic enterprise strategies to unlock sustainable cost advantages
In the US SG&A Cost Study, The Hackett Group® compared the FY23 and FY24 financial performance of the 1,000 largest nonfinancial services companies in the United States to identify the degree to which organizations are optimizing SG&A costs. Our analysis segmented companies into four groups based on their year-over-year SG&A cost changes: 1. Cost cutters: Companies that reduced SG&A cost as a percentage of revenue and reduced absolute SG&A costs. 2. Inflation beaters: Companies that reduced SG&A costs as a percentage of revenue and contained the absolute costs increase below the inflation rate. 3. Ratio managers: Companies that reduced SG&A costs as a percentage of revenue but increased absolute costs by more than the inflation rate. 4. Cost growers: Companies whose SG&A costs increased as a percentage of revenue.
MIAMI--(BUSINESS WIRE)--The Hackett Group, Inc. (NASDAQ: HCKT), a leading Gen AI consultancy and enterprise digital transformation firm, today announced new findings from its US SG&A Cost Study and Scorecard, revealing that selling, general and administrative (SG&A) costs have reached their highest point in five years. Median SG&A cost as a percentage of revenue increased from 13.7% to 14.3%, largely driven by slowing revenue growth.
“The next wave of SG&A performance will be defined by organizations that reimagine work, build strong AI governance, and use data-driven intelligence to streamline decision-making and unlock new levels of efficiency.”
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The study – based on an analysis of the 1,000 largest U.S.-headquartered public companies – found that 62% saw SG&A costs rise as a share of revenue, and 78% failed to keep cost growth below inflation, despite inflation dropping to 2.9%. Only 17.9% of companies reduced SG&A costs year over year, and just one-quarter of last year’s cost cutters sustained that performance. The Hackett Group’s analysis highlights a substantial seven-percentage-point performance gap between first-quartile and median companies.
“Organizations face mounting pressure as revenue growth cools and complexity increases, but the data shows that traditional cost-cutting approaches are not enough,” said Murray Shevlin, principal, Benchmarking at The Hackett Group®. “Sustainable SG&A improvement requires companies to move beyond tactical measures and embrace a more strategic operating model – one powered by process excellence, digital enablement and next-generation AI capabilities.”
Digital World Class® leaders set a new benchmark
For a typical $10 billion company, the potential annual cost advantage of achieving Digital World Class® (top-quartile performance on efficiency and effectiveness measures) across SG&A functions is $290 million. Narrowing the scope to just finance, human resources, information technology (IT) and procurement, the potential annual savings could reach $90 million.
Digital World Class® technology organizations also allocate significantly more investment toward advanced technologies, devoting 34% of IT spend to AI and intelligent automation – three times more than typical companies. These investments, when employed as part of the holistic operating model transformation, are driving breakthrough SG&A cost savings across leading global enterprises.
Agentic enterprise strategies emerge as the path forward
The report outlines a clear set of actions for companies seeking to reverse SG&A cost trends and build long-term resilience:
- Embrace an agentic enterprise model, redesigning work so AI can assist, augment, and autonomously act with human oversight.
- Establish a robust AI center of excellence (COE) to govern the end-to-end life cycle of AI initiatives.
- Remove process and system complexity – the top barrier to AI optimization cited by executives.
- Invest in data foundations and analytics, enabling higher-quality insights and automation at scale.
- Strengthen partnerships with technology providers and third-party services to enhance operational efficiency.
“We’re seeing a clear pattern: companies that lean into Gen AI and agentic principles are pulling ahead,” said Kyle McNabb, principal and Gen AI Executive Advisory program leader at The Hackett Group®. “The next wave of SG&A performance will be defined by organizations that reimagine work, build strong AI governance, and use data-driven intelligence to streamline decision-making and unlock new levels of efficiency.”
The US SG&A Cost Study and Scorecard analyzes the publicly available financial statements of the 1,000 largest public companies headquartered in the United States for fiscal year 2024. Full results and insights from the 2025 US SG&A Cost Study and Scorecard are available to download for free with registration.
About The Hackett Group®
The Hackett Group, Inc. (NASDAQ: HCKT) is a Gen AI strategic consulting and executive advisory firm that enables Digital World Class® performance. Using Hackett AI XPLR™ and ZBrain™ – our ideation through implementation platforms – our experienced professionals help organizations realize the power of Gen AI and achieve quantifiable, breakthrough results, allowing us to be key architects of their Gen AI journey.
Our expertise is grounded in unparalleled best practices insights from benchmarking the world’s leading businesses – including 97% of the Dow Jones Industrials, 90% of the Fortune 100, 70% of the DAX 40 and 51% of the FTSE 100. Visit us at www.thehackettgroup.com.
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