Professional services cost management is getting harder. The cost of simply employing people has gone up and keeps going up, while clients are becoming more careful about what they will pay. When every cost is rising, “work harder” is not a strategy.
Let’s talk about the conversation happening in finance meetings across the sector right now, because it’s not a cheerful one.
The cost of simply employing people has gone up and keeps going up. Employer National Insurance rose to 15%. The minimum wage climbed. The Employment Rights Act has added day-one rights and reformed sick pay, all of which is right and proper for employees and all of which lands on the firm’s cost base. Roughly half of business leaders are forecasting higher operating costs this year. And in a professional services firm, your costs are overwhelmingly people, expensive, talented, and increasingly mobile people you can’t simply shed.
So margins get squeezed from both ends. Costs are sticky and rising; clients are more careful about what they’ll pay. And the traditional lever, sweat the team harder, push utilisation up another few points, is exactly the lever I’d warn you off pulling right now, because the logic doesn’t hold: push your best people too hard and they walk, and replacing them costs you far more than the margin you ever saved by squeezing.
Here’s my actual gripe, after twenty-five years of operations roles: most firms are trying to manage a rising cost base while flying half-blind. Ask a managing partner what it truly costs to serve their third-largest client, including all the unbilled time, the partner attention, the rework, the admin tail, and you’ll often get a confident answer that turns out to be a guess. We manage what we can see, and in a lot of firms the things that quietly destroy margin are precisely the things nobody can see clearly.
That’s the bit I get excited about, and it isn’t glamorous. Before you automate anything, before you buy anything, you need to actually see your operation. Where does time go? Which clients and which matters genuinely make money once everything’s loaded in? Where is partner time, the most expensive resource in the building, being spent on work that doesn’t need a partner? Where does the same low-value task get done forty times a month across the firm by hand?
When you can see that clearly, two things happen. First, you stop guessing about cost and start managing it. Second, automation suddenly has a target. Instead of “let’s do something with AI,” it becomes “this specific, repetitive, expensive process is bleeding three hundred hours a quarter. Let’s fix that one.” That’s a business case any CFO can sign off, because it’s grounded in a number, not a hope.
I’ll be straight about what technology can and can’t do here. It won’t reverse the NIC rise or repeal employment legislation, anyone telling you otherwise is selling something. What it can do is give you back control of the part of the cost base that is yours to manage: the wasted hours, the manual rework, the invisible cost-to-serve. In a year where the statutory costs are fixed and climbing, the discretionary inefficiencies are where the fight is won.
The work we do usually starts with exactly that visibility, dashboards that show a board, at a glance, where the money and the hours actually go, so decisions stop being instinct and start being informed. It’s far less exciting than the AI headlines, and far more useful.
If you can’t currently answer “which clients actually make us money?” with confidence, that’s not a failing, it’s just the place to start. And it’s a good place.
Author: Colin Telford, COO.
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