5-Year Talent Trends

**The war for talent continues to be as acute or critical as it was in 2022.**

Talent must take center stage as the number one priority for all professional service providers.

Over the past five years, real growth in billable hours (utilization) has been small. Almost all professional services productivity improvement has come from the use of technology to lower overheads and administrative costs along with remote consulting delivery. PSO employees are working the same number of annual hours (2,080 hours per year), but they are working smarter through the use of:

Agile development methodologies
Virtual consulting delivery (limiting travel time)
Maximizing multi-tasking across multiple projects
Limiting administrative time
Knowledge sharing
Developing greater levels of expertise and productivity

Voluntary attrition fell slightly in 2022 to 9.3% from 9.8%.

However, involuntary attrition is up slightly (4.4% vs 4.2%), indicating a more competitive market. Skilled employees still have more choice than ever before, and continue to vote with their feet. This makes talent retention more important than ever before, as there is an inverse correlation between voluntary attrition rates and a host of financial, operational, and project KPIs.

Billable utilization has dropped almost 2% and almost all productivity improvement has come from the effective use of technology.

PS employees are working the same number of hours, but are working smarter with the help of technology. Around two thirds of working hours are now delivered virtually (limiting travel time) and technology is helping to maximize multitasking across multiple projects and limiting administrative overhead.

Why do employees leave?

There are multiple reasons for talent
leaving good businesses, but, in many
cases, there is a primary catalyst for
someone choosing to move on.

The number one reason, with 36.2%, is “better opportunity,” which translates to a better work environment, better compensation, a better boss, or more opportunity for advancement.

Once hired, how long until people are fully billable?

Many factors are making it increasingly difficult to onboard new hires and then prepare them for fully billable work.

All indicators point to a continuing talent shortage in professional services. It now takes nearly 63 days for the average new hire to become productive - up nearly 4 days on last year and well above the previous 5-year average. Every additional day of ramping up time is significant as it represents lost billable hours not just for the new starter, but for their colleagues too.

SaaS and Software companies continue to trail the pack in ramp time (both requiring in excess of 80 days on average) with IT consultants continuing to lead at 50. Management consulting companies averaged 62.4 days to ramp employees, versus 60 days for Architecture & engineering firms. Smaller organizations take longer, too, as they need people to perform more roles and have less well-defined onboarding programs.