Professional services organizations confronted declining revenues and other challenges last year, according to a new report.
The report, from the research and consulting firm Service Performance Insight, found declines in billable revenue per consultant and overall revenue per employee at a set of professional services firms it used as a benchmark. The report also found an average deterioration in net profits of more than 5 basis points among the professional services organizations it benchmarked, along with reduced revenue growth, in 2013. However, the future is looking brighter for this year for professional services organizations such as accounting firms.
According to the SPI Research report, most major metrics for professional services firms declined last year, particularly from slowing revenue growth. Revenue growth year-over-year of 10 percent slowed considerably from 2011, when it was 13.7 percent. Professional service firms had experienced a dramatic uptick in 2011 as businesses recovered from the recession. But after professional services organizations curtailed hiring in 2009, they began adding employees again in 2010 ahead of other business sectors.
The report found that last year, 88 of the 238 professional services organization benchmarked, or 38 percent, reported year over-year revenue growth of less than 5 percent, while 33 firms, or 14.4 percent reported negative growth. Back in 2011, only 28 firms, or 13.3 percent, reported negative growth. In 2013 only 71 firms, or 30.9 percent, reported year-over-year revenue growth of over 15 percent compared to 75 firms, or 45.2 percent, in 2011.
SPI Research expects modest growth this year, but probably not more than 10 percent.
The report was sponsored by the cloud accounting software provider Intacct. To download a copy from Intacct’s Web site, click here.