Three Consulting Industry Trends for 2024

By: Dave Hofferberth, Managing Director, Service Performance Insight

The SPI Professional Services Maturity™ Benchmark Report is considered to be the global standard for consulting and professional services benchmarks. The 2024 report is out, and we have used it to uncover three consulting industry trends that you can use to help your firm improve business outcomes in 2024 and beyond.

Consulting Trend #1: Uncertainty & Inflation Leads to Lower Growth

After a wild past few years, the professional services industry hit the snooze button in 2023. Accelerated inflation and uncertainty prompted many businesses to curtail expenditures. As a result, the Professional Services market experienced its lowest annual revenue growth rate in over a decade at 9.7%, according to the 2024 SPI Professional Services Maturity Benchmark Report. Despite these challenges, most Professional Services Organizations (PSOs) maintained profitability by year-end. As you can see below, Management Consulting firms maintained a 11.4% profitability rate, with IT consulting firms coming in slightly higher at 13.1%.

2023 Consulting Firm Growth Rates

Trend #2: AI Takes Center Stage

2023 was an exciting year in technology, with Artificial Intelligence (AI) taking center stage. Suppliers of business applications for the professional services market have seen significant growth due to the need for greater planning across PSOs, and many have embedded AI into their solutions. Analysis from the 2024 SPI Professional Services Benchmarks Report (below) shows that firms expect AI to help improve service execution more than any other area. Consulting and professional services organizations are already using OpenAI to build content, GitHub Copilot for programming and Chatbots for customer support. Use cases will only continue to expand in 2024 and beyond.

How Consulting & Professional Services Firms Will Use AI

Consulting Trend #3: Slim Margins Require Efficiency

Professional services organizations had to balance lower levels of growth with staffing levels last year, and many firms had lower utilization rates and project margins. As you can see, average utilization rates (9.7%), project margins (36.3%) and profitability (12.6%) were all down substantially in 2023. 

Professional Services Growth Rate, Utilization, Project Margin and EBITDA

With much slower growth and slimmer margins, the focus for consulting firms in 2024 must be on improving service delivery. That's easy to say, but how? The 2024 Benchmark Report provides insights here. The one trait that almost all high-performing professional services firms share - Better Visibility. High-performance PSOs (those in the top 80%) have better information visibility than lower-performing firms. As shown below, consulting firms with high visibility have a more robust deal pipeline (2.06 vs. 1.58), win more bids (53.6% vs. 49.1%) and deliver more projects on time (83.9% vs. 74.4%) than their low visibility peers. 

Visibility Drives Performance for Professional Services Firms

Most high-performance firms use PSA or Project-based ERP solutions to help drive operational success. As noted in the SPI Benchmark Report, 90% of high-performing PSOs use project-based ERP and/or PSA solutions, and nearly half have them integrated with the core financial management solution. This allows executives to understand project-related data in real time, which is imperative for success during periods of uncertainty.

Discover More Consulting Industry Trends

Those are just three of the many trends you can uncover in the 2024 SPI Professional Services Maturity™ Benchmark Report. The full 200+ page report will help you understand important KPIs and provide insights into consulting and professional services trends that will help you improve business outcomes.