Exploring Trends in the European Professional Services Landscape

In a recent Deltek webinar chaired by Larry Zeenny, Editor-in-Chief for Consultancy.org and featuring guest speaker Dave Hofferberth, Managing Director of Service Performance Insight (SPI), we delved into the current state of the professional services industry in Europe as found in SPI's annual study, the ‘2025 SPI Professional Services Maturity™ Benchmark Report'.

European Firms Showing Better Overall Performance

The European professional services market exhibits unique trends compared to other parts of the world. While revenue growth and billable utilization have declined globally, Europe has shown a more consistent performance overall. European firms tend to demonstrate higher profitability compared to their counterparts in North America, but they also face challenges such as higher project overruns and fewer projects delivered on time. For example, Dave Hofferberth pointed out, "on-time delivery fell to just under 70%, but we typically aim for at least 80%."

To navigate these challenges, firms are focusing on strategic initiatives such as digital transformation, process automation and talent management. Adopting AI and other advanced technologies is seen as a key driver for future growth and efficiency. Firms are also emphasizing the importance of client relationships, employee engagement and operational excellence to stay competitive in a rapidly evolving market.

Overall, the professional services industry in Europe is at a pivotal point. While there are challenges to overcome, there are also significant opportunities for firms that can adapt, innovate and execute effectively. The coming years will likely see continued transformation as firms strive for sustainable growth and profitability.

The Role of AI in Professional Services

AI is rapidly transforming the professional services landscape. During the webinar, a poll revealed that increasing efficiency is the primary reason for 83% of firms adopting AI, followed by service offering innovation at 17%. Dave Hofferberth shared findings from SPI's recent study on AI, emphasizing its exponential growth and the need for firms to dedicate resources to understand and leverage AI effectively.

AI is expected to improve efficiency, reduce costs and innovate service offerings. However, firms anticipate a positive ROI from AI implementation within 12 months, highlighting the importance of a strategic approach to AI adoption.

Performance Fundamentals: Sales, Delivery and Profit

Sales, delivery and profit are other fundamental areas that are crucial for any professional services business to focus on and as the SPI research suggests, are highly interconnected. When asked about this, Hofferberth highlighted the importance of standardized delivery methodologies, on-time delivery and healthy project margins and emphasized that high billable utilization and efficient delivery processes are essential for maintaining profitability. In particular, Dave Hofferberth shared, "on-time delivery is one of the most important KPIs because it drives client satisfaction".

According to the SPI report, high-performance firms consistently outperform the market by excelling in several areas. These firms sell larger projects, manage the sales process effectively and maintain a high backlog entering each quarter. They also minimize non-billable hours and balance on-site and off-site delivery to maximize efficiency. Dave Hofferberth explained, "the organizations that really performed well had around 25% of their people on site and 75% of the services delivered offsite."

Dave Hofferberth also highlighted that high-performance firms achieve significantly higher profitability by focusing on quality delivery, client satisfaction and employee engagement. These firms serve as aspirational models for others in the industry.

Conclusion

As the European professional services industry navigates a period of transformation, firms that can adapt quickly and strategically - particularly by embracing AI and digital transformation—are poised to lead the charge in growth and profitability.

While firms face hurdles such as project overruns and the need for timely delivery, they also benefit from higher profitability compared to other regions. The strategic focus on digital transformation, process automation and talent management is crucial for future growth. The adoption of AI and other advanced technologies is set to drive efficiency and innovation, positioning firms to achieve sustainable success.

High-performance firms exemplify the benefits of standardized delivery methodologies, effective sales processes and a balanced approach to on-site and off-site service delivery. By prioritizing client satisfaction, employee engagement, and operational excellence, these firms set a benchmark for others to aspire to.

As the industry continues to evolve, firms that can adapt, innovate and execute effectively will be well-positioned to thrive. The insights from the 2025 SPI Professional Services Maturity™ Benchmark Report provide a roadmap for navigating this dynamic landscape, highlighting the importance of strategic initiatives and the potential of AI to reshape the future of professional services.