New Study Finds that Professional Services Firms Lose 5–10% of Revenue by Failing to Adopt PSA Software

“Cost of Inaction” research sponsored by Kantata quantifies how administrative drag, misutilization, and billing delays erode millions in value

LONDON & IRVINE, Calif.--(BUSINESS WIRE)--Professional services organizations that evaluate but choose not to implement Professional Services Automation (PSA) systems may be quietly losing 5–10% of potential revenue and productivity each year, according to a new IDC White Paper, The Cost of Inaction: The Business Impact of Not Using Professional Services Automation, sponsored by Kantata.

Unlike traditional ROI studies that examine the benefits of technology adoption, this research modeled what happens when firms consciously decide to delay or avoid PSA investment. IDC found that while many organizations without PSA continue to grow and deliver projects successfully in the short term, the decision to not adopt a PSA solution resulted in a slower rate of growth and improvement along with weakening financial and operational control.

IDC’s analysis shows that these distributed inefficiencies — including administrative drag, misutilization of talent, unmanaged scope, and delayed billing — compound over time into material financial impact. In one modeled scenario, IDC calculated more than $7 million in annual value erosion from lost billable time, utilization gaps, finance overhead, and revenue leakage.

According to the study, underlying inefficiencies and issues resulting from a lack of PSA include:

• Up to 20% of skilled employees’ time lost to administration work
• Up to 10% of employee time lost due to idle capacity caused by misutilization
• 5% margin leakage from unmanaged scope due to poor variation tracking
• 3% delay in invoices being issued, leading to delays in billing and revenue recognition
• Rising employee fatigue and attrition (with associated costs of rehire, burnout, and disengagement)

The study highlights that budget constraints are by far the biggest factor influencing organizations’ decision not to adopt a PSA. But, as the study states, “data shows the money ‘saved’ by not investing in a PSA system has already been lost through inefficiency, rework, and missed billing.”

IDC describes this pattern as a compounding cycle of erosion – what one interviewed services leader describes as a “self-reinforcing death spiral” – where manual coordination leads to delayed and inconsistent data, weakening staffing and financial decisions and forcing leaders into reactive management. Because these losses are distributed across project management, resource management, and finance, they often remain invisible until margins tighten or growth stalls.

Administration work is the primary burden without a PSA solution, with some survey respondents reporting close to 180 steps end-to-end, 40 plus documents to track, and a dozen that must be filled in manually for every project.

One services leader interviewed for the study explained the impact candidly: “We’re not failing. But we’re working much harder than we should be for the results we’re getting.” Another services leader noted, “In two months, our certainty of utilization dropped from 90% to 60%. We just don’t have visibility. So, we’re either over-hiring or missing revenue opportunities.”

“This study addresses a question services leaders ask frequently: what happens if we do nothing?” said Nathan Budd, Senior Director, Custom Solutions at IDC and co-author of the study. “Rather than modeling the benefits of adopting new technology, we took a different approach — identifying organizations that evaluated PSA but ultimately made no decision and examining how their businesses evolved afterward. It’s a new way of quantifying business risk, and it shows how small inefficiencies in systems and processes compound over time into structural margin and control challenges.”

The Cost of Inaction study complements recent IDC Business Value research sponsored by Kantata that examines the measurable gains achieved by organizations that implemented Kantata’s PSA platform. Together, the studies present a two-sided view of PSA impact: the performance upside of adoption and the financial downside of delay.

“AI is forcing services firms to rethink how they sell and deliver their expertise while also pushing them to grow revenue without adding headcount — in that world, unpredictability becomes prohibitively expensive,” said Sarah Edwards, Chief Product Strategy Officer at Kantata. “What makes this research so important is that it looks at a question most studies avoid: what actually happens when organizations decide not to act. Too often the decision to maintain the status quo feels safe in the moment, but this study shows that inefficiencies compound, eroding control, profitability, and confidence over time. That’s why getting the foundations right matters so much. Without connected data and processes, services firms can’t fully realize the potential of AI or manage their businesses with confidence.”

For this research, IDC surveyed 100 professional services organizations in the United States, Canada, and the United Kingdom and conducted three in-depth case study interviews with service leaders whose firms had evaluated PSA solutions within the past five years but chose not to adopt one. The study examines how operational gaps in project delivery, resource management, and financial processes compound into long-term performance erosion.

For additional insights and to download a full copy of report, click here: The Cost of Inaction: The Business Impact of Not Using Professional Services Automation.

About Kantata

Kantata is a leading provider of Professional Services Automation (PSA) solutions that help professional services organizations and agencies ensure consistent excellence and profitability across projects. More than 1,500 organizations worldwide rely on Kantata to instantly assemble the ideal team, easily amplify institutional knowledge, and confidently forecast outcomes. Recognized as a Leader on G2’s PSA Software Grid® and Resource Management Software Grid®, and consistently ranked among the top project management software products in G2’s annual Best Software Awards, Kantata supports the full services lifecycle — from scoping and staffing to delivery and forecasting. For more information, visit www.kantata.com.

IDC White Paper, sponsored by Kantata, The Cost of Inaction, The Business Impact of Not Using Professional Services Automation, #EUR154271426-WP, February 2026