This article explains why billable utilization fell to 66.4%, its lowest point in nearly two decades, and how high-performing professional services firms are closing the gap.
Why It Matters: Utilization is a major profit lever. Industry EBITDA was just 9.9% in 2025, well below the expected 15% benchmark.
Key Takeaways:
- Billable utilization hits a nearly two-decade low: Billable utilization, the share of work time billed to clients, fell to 66.4%, well below the 75% high-performer benchmark.
- Professional services automation lifts utilization: PSA software raises billable utilization from 65.0% to 70.2%, worth $2.1 million yearly to a 100-person firm billing $200 per hour.
- High performers plan capacity before gaps open: High-performance organizations hit 75.0% billable utilization versus 64.9% for peers, matching skills to demand early and keeping larger pipeline buffers.
Billable utilization just hit its lowest point in nearly two decades: 66.4%. That's according to the latest SPI Professional Services Maturity™ Benchmark Report, and it's well below the 75% benchmark typically associated with high-performing firms. For an industry that runs on billable hours, this isn't a small dip. It's a structural warning sign, and it's already showing up in the numbers that matter most: revenue growth, profitability, and resource efficiency.
This decline didn't happen overnight. It's the product of margin pressure, slower project starts, and increasingly cautious clients. Three challenges professional services firms (PSOs) have been grappling with for years. But this benchmark shows just how much ground has been lost, and why fixing utilization has become one of the most urgent priorities for PSO leaders.
What's Driving the Decline?
Several forces converged to push utilization to this record low. Client budgets have tightened, and transformation projects are being deferred, reducing demand for billable work. At the same time, headcount grew 2.8% in 2025, so more consultants are now competing for a shrinking pipeline of billable work. The result: more bench time, more unrecovered capacity, and compressed margins.
That dynamic isn't just structural; it's also tied to how clients spend. When capital becomes more expensive, organizations shift away from large discretionary programs and toward leaner, defensive initiatives. The projects that do move forward tend to be narrower in scope, making it harder for PSOs to fully absorb consultant capacity.
The five-year trend makes this even more striking. In 2021, average billable utilization stood at 73.2%. By 2025, it had eroded by nearly seven percentage points, a slow bleed that is now impossible to ignore.
This raises an obvious question: why keep hiring when the market has slowed down? In most cases, headcount plans are set months ahead of demand signals; firms are staffed for a recovery that hasn't fully arrived yet, leaving them with capacity they can't yet absorb.
The Profitability Math Is Unforgiving
While a few percentage points may seem insignificant, utilization is one of the most powerful financial levers in a PSO. Small changes in consultant productivity can translate into millions of dollars in revenue and significant swings in profitability.
Here's why this matters beyond the headline number: every underutilized consultant represents revenue that's simply never billed. Strategic operational changes can close that gap fast.
Take technology adoption as one example: according to the 2026 SPI Maturity Benchmark Report, the adoption of professional services automation (PSA) alone drives an average 8% relative increase in billable utilization, from 65.0% to 70.2%. For a 100-person firm billing at an average rate of $200 per hour, that improvement generates $2.1 million in incremental annual revenue.
Conversely, firms that don't address utilization gaps are quietly subsidizing idle capacity, and it shows up on the bottom line. Industry EBITDA sat at just 9.9% in 2025, well below SPI's expected 15% benchmark. Underutilized capacity is one of the biggest reasons why.
Four Ways High-Performing PSOs Are Pulling Ahead
While the average PSO struggles at 66.4% billable utilization, the gap is even starker when comparing High-Performance Organizations (HPOs) directly to their peers: SPI Research found HPOs achieved 75.0% billable utilization, versus 64.9% for other non-HPO firms, a 16% relative improvement. So, what are they doing differently?
1. They build operational discipline around an integrated technology stack
High-performing firms don't simply invest in software; they use technology to create visibility and consistency across the business. Integrated PSA, ERP, CRM, and HCM systems provide a connected view of projects, people, clients, and financial performance. This enables more informed decision-making around forecasting, staffing, and resource allocation.
Firms using Project-based ERP solutions reported revenue growth of 5.7% versus 4.8% for those without, and EBITDA of 10.2% versus 8.6%. The tools aren't incidental; they are the infrastructure of performance.
2. They embrace remote and hybrid delivery
HPOs averaged 18% less on-site delivery than their peers. The data confirms what many firms resist accepting: consultants working off-site can serve multiple clients more efficiently, directly supporting higher utilization rates.
3. They align skills to demand before the project starts
High performers are significantly more effective at matching consultant skills to project needs in advance. Their new hires become productive 18% faster than the industry average — 54 days versus 65 days — reducing the runway of low or no utilization after onboarding.
4. They maintain a stronger pipeline buffer
HPOs consistently carry larger backlogs and deal pipelines, giving resource managers more lead time to assign consultants before gaps open up. Utilization isn't recovered reactively; it's protected proactively.
Actions Leaders Can Take Right Now
The gap between high performers and the rest is not mysterious. It's operational. Here are four concrete steps leaders can take today:
- Audit your bench time by role and practice area. Understanding where capacity is sitting idle helps uncover whether the issue stems from weak demand, skills mismatches, or ineffective staffing decisions. Identifying the root cause is the first step toward improving utilization.
- Evaluate your PSA and resource management capabilities. Greater visibility into resources, project demand, and consultant availability enables more accurate staffing decisions and reduces avoidable bench time. If your team is scheduling in spreadsheets or relying on tribal knowledge to assign consultants, you are leaving revenue on the table. Firms with integrated PSA tools report a measurable utilization advantage — and $2.1M in incremental revenue for a 100-person firm is a compelling ROI conversation.
- Rethink your on-site delivery ratio. Reducing unnecessary travel and increasing delivery flexibility can help consultants spend more time serving clients and less time between engagements. If your model still defaults to on-site as the standard, model what a two-thirds remote, one-third on-site split would mean for your capacity and client coverage. HPOs are already there.
- Close the loop between sales and delivery earlier. Improving collaboration between pipeline management and resource planning helps prevent utilization gaps before they occur. Utilization gaps are often a forecasting failure before they become a staffing failure. Bring delivery leaders into pipeline reviews so resource planning starts weeks — not days — before a project is signed.
Data sourced from the 2026 Professional Services Maturity™ Benchmark, published by SPI Research in partnership with Deltek.
SPI Report
Benchmark Your Profiessional Services Firm
Discover the KPIs, AI trends, and best practices driving higher utilization, predictability, and profitable growth.
