The productivity gain that landed on someone else’s P&L

A firm gets meaningfully faster at the work, and margin doesn't move. The pricing model, not the operation, is usually where the gain went.

By Steve 5 min read
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A professional services firm invests in better tooling, tightens its templates, and gets a piece of recurring work down from forty hours to twenty-eight. The delivery team is pleased. Six months later the finance review shows revenue slightly down, costs roughly flat, and margin unchanged at best. Nothing went wrong operationally. The improvement was real. It simply landed on the client’s income statement rather than the firm’s. This is not a rare accident. It is the predictable output of pricing on inputs while improving on inputs. Any firm that bills…

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