Margin under pressure in 2026: why utilisation rate is becoming a boardroom metric

Introduction

The second half of 2025 confirmed what many professional services leaders had suspected for a while: growth is not coming back to pre-2020 levels any time soon. Napta's 2026 market trends report, based on more than 300 survey responses and 15 in-depth interviews with consulting, audit and IT services leaders across Europe, describes a sector settling into a lower, steadier growth regime. Resource allocation has become the primary lever firms can still pull to protect profitability, now that revenue growth alone can no longer be relied on to do the job.

The picture looks different depending on where a firm sits. In the UK specifically, the MCA's own 2026 Annual Industry Report puts the consulting sector at £21.8bn, with fee income forecast to grow 6% in 2026 and 8% in 2027, and export earnings up 9% year on year. Growth is real. But it sits alongside the same question Napta's European data raises: growing revenue and protecting margin are not the same discipline, and 2026 is the year the difference between the two becomes harder to ignore.

That reframing touches every part of how a firm runs itself. Three shifts define where margin will actually be won or lost in 2026:

• Pricing: moving away from pure time-based billing towards models tied to outcomes.
• Utilisation: treating occupancy as a direct margin lever, not just an HR metric.
• Structure: rethinking which layer of the team actually creates value, and pricing accordingly.

None of this plays out the same way in every part of the market. It is also why resource management has moved from a back-office planning exercise to a subject the CEO now follows as a performance indicator in its own right.

A) The time-and-materials model is running out of road

For decades, day-rate billing gave professional services firms a simple, dependable link between hours sold and revenue booked. Napta's 2026 report suggests that link is breaking. Half of respondents expect pricing to shift towards a hybrid model combining a fixed fee with a variable, outcome-linked component. Only 8% expect the pure time-and-materials model to survive as is, against 20% who expect pure fixed-fee arrangements to become the norm.

Clients are pushing this shift as much as firms are choosing it. 42% of respondents now rank the ability to demonstrate return on investment as a primary criterion in how buyers select a provider. A day rate no longer speaks for itself; a firm has to show what that day actually bought.

Recardo Jackson, Vice-président exécutif et Directeur Général at MSG Group, describes the change directly: firms used to bill clients on time spent and resources mobilised, but clients now increasingly expect pricing models built around results or value created instead.

The pace of that shift is not uniform across the sector. Restructuring and performance-improvement work has priced on outcomes for years; generalist consulting is only now catching up. Audit sits at the other end: bound by regulatory standards such as ISQM-1, fee structures there are likely to stay largely time-based for longer, whatever the pricing debate looks like elsewhere in the market.

The risk in moving too slowly is not that firms miss a trend. It is that they keep selling volume in a market that has stopped paying for it, and quietly compress their own margin in the process.

B) Utilisation rate becomes the metric the boardroom actually watches

If the unit of billing is changing, the unit of profitability is not. Napta's report is explicit on this point: gaining one or two points of occupancy represents a direct, immediate lever on margin, and in a period of moderate growth, it is often a more reliable lever than chasing new revenue.

Michael Girke, Partner at Wavestone Germany, sees this as a structural shift for the industry over the coming years, not a temporary correction. The leaders in Napta's survey point to the same short list of priorities to protect economic performance: optimising utilisation, rationalising team size, sharpening commercial efficiency, and holding the line on costs. Utilisation sits at the top of that list because, unlike the other three, it can be acted on week by week rather than restructured once a year.

That is also why utilisation is increasingly discussed at board level rather than left to practice leads alone. A one-point swing in occupancy across an organisation of any scale moves the P&L in a way that is immediate and easy to attribute, which is exactly the kind of number leadership now wants to see moving in real time rather than review weeks later in a spreadsheet. Firms that have put this discipline into their day-to-day allocation decisions report the scale of what is at stake: Napta's own client base has seen utilisation rates rise by up to 5 points at organisation level as a result.

C) Rethinking who actually creates margin

The classic pyramid, a broad junior base delivering standardised work under a thin layer of seniors, assumed that volume itself was profitable. Napta's report describes that assumption under sustained pressure, as routine, standardisable tasks shrink and the value of a mission concentrates increasingly in senior judgement rather than junior hours. Here again, the shape of the problem depends on the firm: a large audit practice managing seasonal campaign staffing faces a very different version of this question to an ESN managing bench time between client assignments.

This creates a real fork for leadership. One path reduces the junior base to protect margin immediately; the other invests in transforming what juniors actually do, accepting a more complex transition in exchange for a stronger long-term pipeline of talent and expertise.

Florent Steck, Managing Director at Interpath, is blunt about what happens when firms avoid that choice: some organisations suffer from weak agility, trapped in siloed ways of working, and that conservatism, the habit of "we've always done it this way", blocks any real transformation of how they manage their resources.

The tension is visible in the numbers too. 21% of leaders in Napta's survey cite retention as a priority challenge, even as overall attachment to the sector remains high, at 3.76 out of 5. Margin pressure and talent retention are not separate conversations. A firm that solves one by degrading the other is simply moving the cost somewhere less visible.

Conclusion

Winning on margin in 2026 will not come from a single lever, and it will not look identical from one firm to the next. It will come from treating pricing, utilisation and team structure as one connected decision rather than three separate ones, adapted to the realities of a given service line: a pricing model that reflects value delivered, an occupancy rate managed as closely as revenue, and a team structure built to keep senior judgement where it matters most.

This is the logic Napta's own platform is built around, bringing Financial Monitoring, Resource Optimisation and Skills Hub together so that pricing, occupancy and skills sit in one connected view rather than three separate spreadsheets. Firms running their resourcing this way report consolidated project margin up by as much as 10 points, utilisation rates up by up to 5 points, and over half of staffing requests resolved in under 24 hours. Those are not incidental efficiency gains. They are the direct, visible outcome of treating resourcing decisions as the margin lever they have become, one allocation call at a time rather than one deal at a time.