Professional Services Intelligence Brief
How to Evaluate Whether a Firm Needs More Staff or Better Processes
Hiring feels like the answer to overload, but it solves only one kind of problem. Test whether your firm lacks people, or lacks the processes that let the people it has do more.
Short answer
A firm needs more staff when demand exceeds the capacity of well-organized people at healthy utilization, and needs better processes when time is lost to rework, waiting, unclear scope or poor planning. Check utilization by role, overruns, rework and queue times before hiring: low utilization alongside overload points to pipeline gaps or misaligned resource planning, as Deltek summarizes SPI’s work,[1] while the Theory of Constraints Institute warns that investing in capacity before using existing resources efficiently raises risk unnecessarily.[2] Compare the cost of a hire with the revenue it must generate, using the rule of thumb that revenue per consultant should be at least twice fully loaded cost.[1]
How can you tell a people problem from a process problem?
Overload has two root causes that look the same from the inside. In a capacity problem, there is more demand than the available people can serve, even when they work efficiently. In a process problem, people are busy but a large share of their time is lost to rework, waiting for information, unclear scope, handoffs, duplicated effort or searching for documents. Hiring helps the first and can make the second worse, because new people add coordination cost and inherit the same flawed processes.
Four indicators separate the two. First, utilization by role. If billable people are at or above a sustainable utilization target and there is a backlog, capacity is a candidate cause; if utilization is low yet the team feels overloaded, the time is going somewhere else. Deltek’s summary of SPI’s work notes that sustained underutilization often points to pipeline gaps, weak forecasting or misaligned resource planning.[1] Second, overruns: frequent overruns of more than 10 percent point to estimating, scoping or delivery discipline rather than headcount.[1] Third, rework and waiting: how much work is redone and how long it sits in queues. Fourth, the distribution of load: are a few people overloaded while others have slack?
What numbers should you gather before deciding?
Collect six months of data and compare it with your plan. For each role: available hours, billable hours, non-billable hours by category (training, business development, administration, rework), overtime and leave. For each engagement: budgeted versus actual hours, number of revisions, days waiting for client or internal inputs, and delivery date versus promised date. For the firm: new work won, work declined or delayed because of capacity, and revenue per billable person.
| Indicator | Points to a people shortage if | Points to a process problem if |
|---|---|---|
| Utilization | Billable staff are at a healthy target and still have a backlog | Utilization is low or uneven while people report being overloaded |
| Overruns | Overruns are rare and work is simply more than planned capacity | Overruns are frequent and above 10%[1] |
| Rework | Rework is low | A large share of hours repeats earlier work |
| Queues | Queues are spread across the firm | Queues sit in front of one step or person |
| Turned-away work | You are declining profitable work | Work is accepted but delivered late |
Revenue per billable consultant is a useful cross-check. SPI’s benchmark, summarized by Deltek, found an average of $210,000 per billable consultant in 2025, and Deltek states a rule of thumb that revenue per consultant should be at least two times fully loaded cost to sustain healthy margins.[1] If a candidate hire would need to bring in that much to pay for itself, test whether there is enough profitable work waiting.
How do the five focusing steps apply to this decision?
The Theory of Constraints Institute’s sequence gives a practical order of operations. Identify the constraint; exploit it by getting the most from the people and time you already have; subordinate everything else to it; and only then elevate it by adding capacity, if at all.[2] The institute observes that people tend to jump straight to elevation, and says that investing too soon raises risk unnecessarily and that exploiting existing resources first typically exposes hidden capacity. The claim comes from a consultancy writing about manufacturing, so use it as a method rather than a prediction.
In a services firm, exploiting the constraint might mean standardizing document templates, reducing meetings, setting a rule that work arriving for review is complete, or moving routine work to a lower-cost role. Those changes cost little and take weeks. If the data still show demand exceeding capacity afterward, you have the evidence to hire, and you know which role to hire.
If you do need people, how should you add capacity?
Choose the role that relieves the constraint. If the constraint is review capacity, a senior reviewer or a delegation program may help more than another junior. If it is intake, an operations coordinator may be the best value. Consider the alternatives to permanent hires: subcontractors, outsourced support or fractional specialists. SPI’s 2025 report noted that headcount growth slowed to 1.9 percent while subcontractor reliance rose to 10.9 percent, showing that many firms were adding flexible capacity rather than permanent staff.[3] Flexible capacity suits demand that is uncertain or specialized, but it needs clear scope and quality control, and it affects knowledge retention.
Whichever route you choose, set the success measures in advance: target utilization, revenue per head and on-time delivery, and review them after three and six months. Hire to a plan, not to relieve a single stressful month.
Frequently asked questions
How do I know if my team is understaffed?
Look for sustained backlog while billable staff are at a healthy utilization level, turned-away profitable work and rare overruns. If utilization is low but people feel overloaded, the problem is likely process or planning.[1]
What does low utilization usually mean?
Deltek’s summary of SPI’s work says sustained underutilization often points to pipeline gaps, weak forecasting or misaligned resource planning.[1]
How much revenue should a billable person generate?
SPI’s benchmark average was $210,000 per billable consultant in 2025, and Deltek’s rule of thumb is at least twice fully loaded cost.[1]
Should I use contractors instead of hiring?
It depends on demand. SPI reported rising reliance on subcontractors, 10.9 percent in its 2025 report, which suits uncertain or specialized demand but requires scope and quality control.[3]
What should I try before hiring?
Exploit existing capacity: protect the constraint, remove waste and rework, standardize recurring work and fix scoping. The Theory of Constraints Institute advises elevating capacity only after that.[2]
What to do next
- Pull six months of utilization, overrun and rework data by role.
- Identify the constraint and protect its time.
- Calculate the revenue a new hire must generate to be worthwhile.
- Set success measures before any hire or contractor starts.
Optional · interactive example
See it in an interactive example.
Firm Economics Dashboard: a service-line dashboard with utilization and realization, a scenario simulator for hours, rate and cost, evidence-linked answers from APIS, and a sample brief, all on synthetic data.
The experience below is built on a synthetic firm, “Demo Advisory Partners,” analyzed by service line. It has no client-level or engagement-level records, so service lines are used to show the method. Nothing in it is real.
- Click the Cost per billable hour card. What has happened to it over the year?
- In the Scenario tab, raise realized rate by 2% and then raise hours by 2%. Which adds more profit?
- Ask APIS why a busy firm may have weak margins.
Understand Your Firm’s Economics and Growth Opportunities
Two Pillars helps professional services firms investigate profitability, capacity, pricing and growth using the firm’s own data and a structured assessment process. A good first step is a delivery workflow review that maps how work moves through your firm, measures waiting time and capacity at each step and finds the one constraint that limits output.
Sources
- Deltek, 5 KPIs from the SPI Professional Services Maturity Benchmark Report Every PSO Must Track for Sustainable Growth (July 15, 2026). Accessed October 2026.
- Theory of Constraints Institute, Five Focusing Steps, a Process of On-Going Improvement. Accessed October 2026.
- SPI Research, The 18th Annual Professional Services Maturity Benchmark Report Is Out Now. Accessed October 2026.
Sources checked October 2026. This guide is general information for the leaders of professional services firms and is not legal, accounting, tax or financial advice. Figures and rules are cited to the sources below and may have changed since they were accessed, so confirm anything you rely on against the current source. Two Pillars & Co is independent of the organizations cited. See our editorial policy.