Top 5 Trends for Professional Services Organizations in 2025

Amidst the ongoing economic headwinds, many professional services organizations are focusing on how to drive profitable growth and higher margins without increasing the headcount.

In this context, it’s noteworthy that while 73% of B2B technology organizations expect their revenues to grow, 49% expect their headcount to stay flat or even decline.

For organizations to achieve this balance, it’s vital for them to capitalize on the trends that help them increase their productivity and profitability at the same time.

In this article, we will explore such top 5 trends that Professional Services Organizations can profit from in 2025.

Focus on Revenue and Margins

Professional services organizations need to revisit their scale-up plans to make their ambitious revenue targets achievable.

According to a TSIA survey, conducted recently:

• 73% of companies expect revenue growth
• 49% of companies expect hiring freezes or potential layoffs
• 57% of companies expect budgets to be flat or reduced

In this context, how can we ensure that the projects we execute have the highest profit margin? As we head towards more challenging times and economic conditions change, we might even see headcount stay flat or even decline.

Therefore, razor focus on project profitability is our best bet in these tough times.

This brings us to the concept of project profitability myth. That’s a situation when projects appear profitable at an individual level, but the overall business is not profitable.

What Could Be the Possible Reasons?

One big reason is inaccurate time data, which leads to projects being priced with inaccurate utilization rates. Scope creep, in varying degrees, is a big contributor too. Though it’s not easily accounted for, resource burndown figures prominently in the list too.

This begs the question: Do you understand your organization’s project profitability at a granular level?

Your organization needs to look at:

• Accurate time data
• Profitability by client and project
• Projects your teams are good at
• The right price for your services

What Should You Do?

Based on the above data, your organization needs to consider the following to improve project profitability:

Bid for High Margin Projects

In the current tough times, organizations need to be selective about the projects they choose. They must resist the urge to play every game that comes their way.

Waiting for high-margin projects may hurt in the short term, but pans out well in the long run. To this end, organizations must leverage everything at their disposal. They should:

• leverage historical data,
• experiment with pricing and fine-tune it, and
• analyze time and resource metrics.

Seeing how things fared historically can help us avoid the common pitfalls. Next, finding out where the most time, money, and efforts went is critical to an organization’s project understanding.

Therefore, it’s vital to maintain strategic patience and only pursue projects with high-margin potential.

Adopt a Per-Engagement Pricing Strategy

Every engagement is different. Therefore, we cannot adopt a cookie-cutter approach to pricing. For a start, organizations can do a total cost analysis for all engagements, including administrative and project overheads.

That’s because the most common problem that companies face when they go for higher utilization rates is that while the projects are profitable, their contribution to the business as a whole isn’t.

Therefore, organizations must perform scenario pricing analysis before choosing projects based on their face value.

Focus on 100% Resource Time

Accounting for 100% of employee time is critical, and organizations can no longer rely on manual timesheets to do this. Today, we have technologies like Artificial Intelligence and Machine Learning (AI/ML) in place to automate time collection and timesheet creation.

Once you’re able to account for 100% of employee time, you can set billable targets by roles, teams, locations, etc. You must measure the utilization rates by as many parameters as possible to get a granular view of project costs.

In this way, you’ll be better equipped to manage projects in a tougher economy.

According to a TSIA survey, many larger companies leverage Professional Services Automation (PSA) solutions for purposes like revenue management, revenue pipeline analysis, and billing. However, none of them used PSA to manage their projects.

So, for organizations that haven’t yet capitalized on the project management capabilities of PSAs, now is the time to do this. Once a project is completed, PSA can be used to find out how good (or bad) the project margins have been.

Such PSAs have provisions for dashboards that give constant visibility into projects, enabling you to correct the project course before it’s out of hand.

Organizations scouting for PSA solutions must also check whether the solution encompasses the entire gamut of project planning, execution, and delivery.

Embrace Fixed Price, Repeatable Projects

Improving your margins is one of the best ways to improve your business success.

As much as 55% of projects are fixed-price and repeatable. They are well-packaged projects that lend themselves to adding a new service catalog. So, if you’re trying to bring automation into the sales function, the customers will be more likely to buy the product.

Importantly, you must desist from over-customization as a strategy to win more customers as it has lately become unsustainable. That’s because it raises the ownership costs for customers, thus defeating the very purpose of moving to the cloud.

Consider this:

A six-month massive custom implementation could be generating equally massive revenue. But it comes with great complexity and cost. This could cause concern when it’s time to renew or upsell to the customer.

It pays to progressively get better with fixed price, repeatable offers. In the long haul, it’s also a smarter strategy to gain better margins.

However, to be able to do this, you need to integrate documentation into your project strategy. Every time you complete a project, capture the relevant information and insights on what worked and what didn’t for your project’s success.

This documentation culture is critical to the continued success of your project organization. The incoming teams can greatly benefit from the insights and expertise already gained and strive to progressively improve margins.

However, it has been observed that many organizations are still unable to benefit from their own people’s wisdom. They are deploying resources in a use-case-centric manner for billing purposes. But, we need to go more horizontally across the board to gain better control of the fixed project model.

The fixed bid model comes with high revenue risks. When your clients see more risk on their end, they, in turn, shift the burden to their customers. Traditionally, the cost factor has been better managed. But we need new ways to regulate risk.

Advantages of Repeatable Projects

• Easier to sell via digital commerce
• Eliminates over-customization
• Easier to continually improve project quality and margins

What Should You Do?

Here are the top three things you need to do to stay on this course:

Forecast Your Project Risks

Proactively kickstart project risk forecasting instead of having that as an afterthought. Get a real-time pulse on schedule risk, budget risk, and margin risk.

Go Global for Resources

Embrace the global resource model to drive cost efficiency and margins. According to the SPI’s 2021 Professional Services Maturity™ Benchmark Report, 65% of billable hours were delivered through virtual mode. Indeed, remote work is now mainstream. Such high-performing teams are able to ensure 12% more on-time delivery. They reduced project overruns by 29%. Further, organizations can leverage resource cost arbitrage to drive margin efficiencies.

Laser Focus on Project Execution

Organizations must adopt a “mission control” style to operate with real-time dashboards. This visibility helps teams promptly identify potential problems, enabling them to react in real time and proactively preempt risks.

As you can see, repeatability is absolutely critical, and it comes from process standardization. Furthermore, repeatability requires delivery process automation.

To understand the current situation, ask yourself whether your organization does the following:

• Forecast project risks
• Have functional leaders with “colored glasses” who work with the siloed data
• Practice agile delivery methodology
• Have a real-time pulse on projects
• Have visibility into Budget vs. Estimates vs. Actuals

Develop a Culture of Knowledge Sharing and Collaboration

In the early years of professional services, knowledge sharing was not the core competency of such organizations.

People possessing the know-how closely guarded their expertise because it enabled them to get the best projects, the highest utilization rate, and the best bonuses.

Fortunately, things have changed for the better lately. Younger workers are reported to be more collaborative. And, the pandemic accelerated the shift. Since employees weren’t sitting together in offices and on-site spaces for implementation, their collaboration skills improved.

According to a TSIA survey, only 26% of companies have a formal project review process and capture content at the project’s completion. About 65% say they encourage their employees to submit project reports, but they don’t require it as a formal policy.

10% of companies reveal that they don’t capture new best practices or lessons learned from the projects.

So, where do these companies save their project insights?

Again, the survey revealed that 72% of the companies use content management systems (like emails, Microsoft SharePoint, etc). Surprisingly, only 7% of companies use Professional Services Automation (PSA) solutions to capture these project insights. This is concerning because, among the alternatives, PSA is easy to access and use for future projects.

The survey asked respondents the ratings they would give to their company’s sharing culture on a scale of 1 to 10. The average of all responses turned out to be 6.3 out of 10. It’s interesting that, even among the departments, the professional services group has an average rating higher than other high-impact teams like support and customer success.

Knowledge sharing shouldn’t be hard in the information age.

To assess your organization’s knowledge sharing culture, you need to ask yourself the following questions:

• Are the teams engaging and collaborating?
• Are there any gaps in what’s sold and what’s being delivered?
• Are you leveraging the project’s “learning history”?
• Are you able to trace information end to end?

What Should You Do?

Now that you know the current status of your organization’s knowledge sharing culture, you can further strengthen it with the following suggestions.

Enable Collaboration

• Align all the people on a common data platform. This is particularly important when navigating hybrid work.
• Data integration across systems is vital to ensure high data availability and consistency across the organization.

Process Adherence

Standardize processes across the systems. Continuously monitor and ensure adherence to the standards.

Management Discipline

• Management must show the way and empower a culture of sharing and collaboration.
• Create processes that deliver repeatable and measurable outcomes like science. Do not approach it like an art that might give occasional successes but doesn’t help duplicate the previous wins.

Create a Path to Renewable, Subscription Offers

Currently, the percentage of revenue that is subscription or non-project based is low. But we may expect the revenue share to increase in the next 3 years.

To get renewable offers, you need to focus on value realization. To this end, you must know the primary charter of your professional services organization.

It’s critical that adoption and customer value are weighed higher than other parameters like margins, revenue, and customer acquisition.

According to a TSIA study, 41% of XaaS or “Anything-as-a-Service” companies have a documented methodology for developing professional services offers. These offers are designed to increase product adoption by existing customers.

Another TSIA survey asked respondent companies the offers they were selling when they were looking to monetize. Among the responses, the prominent ones were process modeling, 1:1 coaching, and helping customers improve the way they do business.

Therefore, this is the new focus for professional services: being invested in customer’s success. This calls for a major culture change in the organization.

That’s why the renewable subscription model is called the new frontier.

It’s not just about the speed of project progress. Higher priority must be given to integrating PSA with Billing ERP.

To assess your organization’s capability to create a path to renewable, subscription offers, ask yourself if your organization has the ability to:

• Manage subscription or recurring revenue models
• Plan & execute repeatable or renewable projects
• Flexibility to adapt to evolving engagement models

What Should You Do?

These are the two ways you can stay on this path:

Say No to Purpose-Built Solutions

While it may sound rigid, you must avoid focusing on purpose-built solutions. This is because evolving subscription business models require more adaptability. You need to provide support for recurring subscriptions, pre-paid and repeatable or renewable engagements.

Subscription Revenue Management

• Forecast and manage recurring earned revenue and recognizable revenue
• Stay on top of work-in-progress projects and align them with recurring billing model
• Reduce invoice time and bill for completed work at the earliest opportunity
• Stay ahead to achieve 100% burndown and reduce the estimated vs. actuals gap.

Improve Resource Forecasting and Skills Tracking

The sad reality is that while companies invest a lot in revenue forecasting, they fall short with respect to resource forecasting.

The skills your organization needs for current projects might be different from the skills you require for future projects. This calls for the development of new skills on an ongoing basis. The start of a new project requires you to bridge the skills gap on short notice.

It’s better to leverage resource forecasting to meet the requirements of the projects in the pipeline. And, to start recruiting for the skills needed for the project pipeline. This must be emphasized because consultants are difficult to recruit. What makes it even more difficult is that it takes an average of 48 business days for a newly-hired consultant to become billable.

The lag time between project start and resource onboarding can make customers nervous. When organizations are not resource-ready even 3-4 weeks after the project has started, it can adversely affect the customer relationship.

This is why many people call resource and skills management the holy grail of service delivery.

To assess your organization’s resource forecasting capability, ask yourself if your organization has the ability to:

• Forecast resources to adequately staff all project
• Forecast skills gap
• Know people’s availability by role, by location, and by skills in real time
• Know how loaded your resources are now, and in a month/quarter from now
• Gain visibility into the ‘hidden bench’

What Should You Do?

You need to future-proof your resource forecasting by ensuring you:

• Have an integrated view of data for people, skills & competencies
• Embrace AI/ML-driven resource matching and project allocations
• Possess an integrated global time off system for real-time resource availability
• Unearth ‘hidden bench’ for accurate forecasting

To track & manage people’s skills, you need to:

• Consolidate skills and resource management into a single platform
• Integrate two levels of skills management: standardized skills and individual skills
• Empower & encourage people to keep their skills data up-to-date

Conclusion

According to SPI research, companies that implemented PSA solutions are able to achieve 11% more resource utilization. This translates to about 15,000 billable hours. Similarly, such companies are able to get 25% more margins.

So, to be future-ready, you need to implement a state-of-the-art PSA solution today.

Deltek | Replicon’s is the world’s first self-driving PSA, which offers AI/ML-enabled intelligent resource management, intuitive dashboards, and advanced project management capabilities. With this, organizations can optimize resource utilization, better manage project scope and margins, and make better decisions based on a real-time and accurate view of their entire business.