New Study: Professional Services Firms Lose 5%–10% of Revenue Annually by Not Adopting PSA Software

Irvine, CA and London, March 17, 2026 — Professional services organizations that have evaluated professional services automation (PSA) systems but ultimately did not implement them may be quietly losing 5%–10% of potential revenue and productivity each year, according to a new IDC white paper, The Cost of Inaction: The Business Impact of Not Using Professional Services Automation, sponsored by Kantata.

Unlike traditional ROI studies, this research does not focus on the benefits of technology adoption. Instead, it models what happens when organizations deliberately delay or forgo PSA investments. IDC found that many organizations without PSA can still grow and deliver projects successfully in the short term, but this decision slows their growth and improvement, and weakens financial and operational control.

IDC's analysis shows that these scattered inefficiencies—including administrative burden, poor talent utilization, scope creep, and billing delays—accumulate over time into substantial financial impact. In one modeled scenario, IDC calculated more than $7 million in annual value leakage from lost billable time, utilization gaps, financial overhead, and revenue leakage.

The research identifies potential inefficiencies and issues caused by the lack of PSA, including:

• Up to 20% of skilled employee time consumed by administrative work;
• Up to 10% of employee time wasted on idle capacity due to talent misalignment;
• 5% margin leakage from scope creep due to poor change tracking;
• 3% delay in invoice issuance, deferring billing and revenue recognition;
• Increased employee fatigue and attrition (with associated costs of rehiring, burnout, and disengagement).

The research highlights budget constraints as the biggest factor influencing organizations' decisions not to adopt PSA. But as the study states: "The data shows that the money 'saved' by not investing in a PSA system is already lost through inefficiencies, rework, and missed billing."

IDC describes this pattern as a "compounding cycle of erosion"—which one interviewed services leader called a "self-reinforcing death spiral"—where manual coordination leads to delayed and inconsistent data, weakening staffing and financial decisions and forcing leaders into reactive management. Because these losses are spread across project management, resource management, and finance, they often go unnoticed until margins tighten or growth stalls.

Administrative work is the primary burden when a PSA solution is absent. Some survey respondents reported nearly 180 steps and more than 40 documents tracked per project end-to-end, with over a dozen requiring manual entry.

One interviewed services leader admitted: "We haven't failed, but we're working far harder than we should to achieve our current results." Another leader noted: "Within two months, our utilization certainty dropped from 90% to 60%. We lacked visibility, so we either over-hired or missed revenue opportunities."

"This research answers a question services leaders often ask: What happens if we do nothing?" said Nathan Budd, Senior Director, Custom Solutions at IDC and co-author of the study. "Instead of modeling the benefits of adopting new technology, we took a different approach—identifying organizations that evaluated PSA but ultimately did not make a decision, and observing how their businesses evolved. It's a new way to quantify business risk, showing that small inefficiencies in systems and processes accumulate over time into structural margin and control challenges."

The Cost of Inaction study complements a recent IDC Business Valuestudy sponsored by Kantata, which examined the measurable benefits achieved by organizations implementing the Kantata PSA platform. Together, the two studies present a dual perspective on PSA impact: the performance upside of adoption and the financial downside of delay.

"AI is forcing services businesses to rethink how they sell and deliver their expertise, while pushing them to grow revenue without adding headcount—in such an environment, unpredictability becomes costly," said Sarah Edwards, Chief Product Strategy Officer at Kantata. "This research is important because it examines a question most studies avoid: what actually happens when organizations decide not to act. The decision to maintain the status quo often feels safe in the moment, but this study shows that inefficiencies compound, eroding control, profitability, and confidence. That's why building the right foundation is so critical. Without connected data and processes, services businesses cannot fully realize AI's potential or manage their business with confidence."

To conduct this research, IDC surveyed 100 professional services organizations in the United States, Canada, and the United Kingdom, and conducted in-depth case interviews with leaders from three services firms that had evaluated PSA solutions within the past five years but chose not to adopt them. The study examined how operational gaps in project delivery, resource management, and financial processes accumulate into long-term performance erosion.

For more insights and to download the full report, click here:The Cost of Inaction: The Business Impact of Not Using Professional Services Automation。

IDC White Paper, sponsored by Kantata, The Cost of Inaction: The Business Impact of Not Using Professional Services Automation, #EUR154271426-WP, February 2026

About Kantata

Kantata is a leading provider of professional services automation (PSA) solutions, helping professional services organizations and agencies ensure consistent project excellence and profitability. More than 1,500 organizations worldwide rely on Kantata to build the ideal team instantly, scale agency knowledge effortlessly, and forecast outcomes with confidence. Kantata is recognized as a leader in G2's PSA Software Grid® and Resource Management Software Grid®, and consistently ranks among the top project management software products in G2's Best Software Awards. Kantata supports the full services lifecycle—from scoping and staffing to delivery and forecasting. For more information, visit www.kantata.com.