2019 PS Maturity™ Benchmark
Item Number: SPI19PSMB
The report contains:
- 216 pages with 235 insightful charts and graphs
- Analysis derived from 622 Professional Service Organizations representing almost 400,000 consultants
- Five-year trend analysis for 160 key performance indicators (KPIs)
- Detailed income statements
- Profiles of the Top 30 Best-of-the-Best service firms
8 Professional Services vertical markets:
- Software PS: Service divisions within software companies – 12.5%, representing 78 firms and ~ 69,000 consultants;
- Management Consulting: Management consultancies – 12.1% representing 75 firms and ~ 29,000 consultants;
- SaaS PS: Service divisions within software-as-a-service providers – 11.3% representing 70 firms and ~ 23,000 consultants;
- Marketing, Advertising and PR: Advertising, marketing, communication firms – 3.2% representing 20 firms and ~ 10,000 consultants;
- Accountancies: Accounting firms – 3.1% representing 19 firms with ~ 20,000 accountants and auditors;
- Value-Added Resellers: resell hardware, software and provide technology services, training and support – 2.3% representing 14 firms with ~ 2,000 consultants;
- Hardware (and Networking) PS: Service divisions within hardware and networking manufacturers – 1.9% representing 11 firms with ~ 29,000 consultants;
- Other PS: government contracting; managed services; healthcare consulting; staffing; R&D, etc.
The 2019 Professional Services Maturity™ Benchmark revealed industry growth of 9.7%, above the five-year average of 9.4%. The 622 PS organizations represented in this benchmark employ over 380,000 consultants who each produced, on average, $206,000 in annual revenue; collectively these firms generated over $57 billion in PS revenue! With improvement in many financial metrics, these firms reported significantly higher year over year earnings with average net profit moving up from 14.2% in 2016 to 16.8% in 2017 to 18.5% in 2018. This is the highest average net profit ever reported in this benchmark! Higher bill rates; more recurring revenue and lower G&A spending were the primary catalysts for profit improvements.
Several leading indicators improved in 2018. The size of the sales pipeline grew from 174% to 181%; the win percentage improved from 48% to 49% and the percentage of revenue from new logo clients increased from 24% to 30%.
Geopolitical turbulence and slowing global growth will have an impact on Professional Services. Slowing growth in 2019 is foretold by a decline in backlog – decreasing from 46.2% to 44.7%. in 2018 consulting firms reduced hiring with headcount growth slowing from 9.2% to 7.7%. Firms had trouble ramping the huge cohort of new hires from 2017 which led to sharply lower billable utilization which declined from 71.5% to 69.7% (the lowest level in 5 years). At the same time, the percentage of non-billable headcount surged from 24.6% to 27.2%.
2019 has gotten off to an uneven start. While SPI Research expects volatility in the market, we also expect executives in every industry will now more than ever before depend on the advice and guidance given to them by leading consultants. No one can precisely predict the future, so having enough options available to ensure success regardless of how the market moves, will benefit PSOs significantly.
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