Maxed out: The top KPIs you need to watch

The key metrics that help you maximize profitability and growth

Breaking through the barriers to growth

IT services firms are fighting an uphill battle against tight margins, unpredictable utilization, and spiraling overheads.

In a time where every resource is stretched to the limit, the path to growth lies in mastering a number of profitability, efficiency, and productivity metrics. With a little extra simplification and streamlining, they can do more than just survive—they can thrive, even in a competitive and uncertain market. Here’s how to turn the tide by paying close attention to the KPIs that matter most.

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Billable utilization: More than just busy work

Only 20% of firms expect to hit a +51% utilization rate, with 40% hitting their internal targets less than once a week.

Utilization isn’t just about keeping teams busy—it’s about ensuring every hour is billable. Streamlining operations, better scoping, and making it easier for your team to track their time against the work they do can help push utilization rates into profitable territory.

Gross margin: Finding the sweet spot

Only 42% of firms expect to hit a healthy +26% gross margin in 2024, against a 30% benchmark.

Maximizing gross margins is critical for staying competitive, but most firms are falling short. To find that sweet spot, it’s all about refining pricing strategies and cutting out inefficiencies.

Average billable rate: Setting the bar

Setting the right billable rate is a balancing act. It needs to be competitive, yet reflective of the value delivered. Regularly reviewing rates against the market can help keep revenues strong.

Overhead spending: The cost of doing business

37% of firms expect to hit at least 26% average overhead spend, with a 20-30% industry benchmark.

Overheads can quickly spiral out of control, but keeping them in check is key to maintaining cash flow. The rule of thumb: keep at least three months of overhead in reserves to weather any storm.

Scoping accuracy: Nailing it down

48% of firms expect to hit at least 26% average scoping accuracy this year, compared to a 20% benchmark.

Accurate scoping is the foundation of profitability. Getting it right means fewer surprises down the line and more projects completed on time and within budget.

Project profitability: The bottom line

60% of firms don’t complete projects profitably on a weekly basis, with 32% seeing profits less than once a month.

Consistently profitable projects are the hallmark of a successful firm. To achieve this, focus on refining processes, controlling costs, and delivering exceptional value to clients.

New Business: Winning the next big thing

Nearly half (48%) of firms win client pitches once a month or less, with 16% winning less than once every six months.

Securing new business is critical for growth, but competition is fierce. To boost win rates, firms need to sharpen their pitch strategies and demonstrate clear value propositions.

The takeaway: Turning insight into action

Now that we’ve uncovered the key KPIs holding IT services firms back, it’s time to put this knowledge to work.

By honing in on these critical metrics—whether it’s tightening up gross margins, maximizing billable utilization, or refining scoping accuracy—you can unlock new levels of efficiency and profitability. The path to thriving in a competitive and uncertain market is clear: streamline, simplify, and relentlessly optimize.