Meet Sarah. She’s the COO of a $50M IT services firm. She looks at her revenue growth—up 4.6%—and thinks she’s surviving the market correction. She isn’t. She’s slowly bleeding out.
The latest data from the SPI 2025 Professional Services Maturity Benchmark reveals a brutal truth: average billable utilization has plummeted to 68.9%. This is down from the healthy 73-75% range seen in peak years. Why does this matter? Because that delta doesn't just lower revenue; it decimates profitability. In 2025, EBITDA margins in the sector dropped to a decade-low of 9.8%.
For a firm like Sarah’s, the difference between 69% and 75% utilization isn't an operational detail. It is the difference between single-digit survival and 20%+ EBITDA expansion. If you are running flat role-based targets or managing your bench by "gut feel," you are likely part of that 9.8% statistic.
Generic targets kill culture and margin simultaneously. You cannot hold a Senior Architect to the same utilization standard as a Junior Developer. The "Goldilocks Zone" for firm-wide utilization is 75-80%. Go lower, and you lose money. Go higher (above 85% firm-wide), and you burn out your talent, spiking attrition.
Based on high-performance firms (top 20% achieving >30% EBITDA), here are the targets you must set:
Data from Mosaic and SPI confirms that firms hitting these role-based targets see a direct correlation to net profit. The mathematics of professional services are unforgiving: a 5% increase in billable utilization can result in a 30% jump in EBITDA because your fixed costs (salaries) remain static while pure margin flows to the bottom line.
You cannot simply demand "more hours." That leads to bad data entry and resentment. You must optimize the engine.
Many firms have employees who are technically "billable" but are hiding on internal projects. Audit your non-billable codes. If a resource is not billing, they must be training for a specific upcoming demand or supporting active business development. Anything else is waste.
Leading firms use PSA (Professional Services Automation) tools to forecast utilization 60 days out. If you are reacting to last week's timesheets, you are too late. You need to see the dip coming in March so you can adjust sales focus in January.
Standardize your denominator. Utilization is calculated against 2,080 hours (40 hours x 52 weeks). Do not exclude holidays or PTO from the denominator when calculating firm-wide capacity; doing so artificially inflates your metrics and hides the true cost of your workforce.
The Verdict: Get your juniors to 90%, clear the path for your seniors to sell, and relentlessly track that firm-wide 75%. That is how you escape the 9.8% EBITDA trap.
