A global survey of IT services providers finds that the most profitable organizations tend to spend less on payroll by relying more heavily on junior staff to fulfill clearly defined roles.
Conducted by Service Leadership, the survey also reveals that the top 25 percent of providers plan to give four times fewer employees (6.1 percent) salary increases of more than 6 percent compared with the least profitable providers.
Junior talent, automation, and shifting compensation strategies
In the U.S., only 15 percent of employees received salary increases above 6 percent in 2025—the second-lowest of all regions. More than half (56 percent) are planning increases between 3.1 percent and 6.0 percent, the highest across all regions. Still, just 7.5 percent expect raises above 6 percent, with increased automation and economic uncertainty contributing to a more conservative approach.
Overall, the most profitable providers have payrolls 8 percent lower than the median and 13 percent lower than the bottom quartile, the report notes. However, they offset this with greater use of variable compensation and bonuses to drive performance.
The data suggests these organizations have identified opportunities to assign narrower, more automated service roles to junior team members, while less profitable providers continue to use senior technicians to handle multiple responsibilities. For example, an IT technician with a Service Desk L3 certification can cost up to 54.2 percent more than an L1 technician.
Turnover trends and the impact of experience levels
Not surprisingly, more profitable IT service providers also experience higher churn. Employees with less than three years of experience leave at 2.5x the rate of those with eight or more years in the field.
Experience requirements will always vary based on the services delivered, but the survey indicates that profitable providers have pinpointed “sweet spots” where junior staff—supported by automation—can maintain quality while lowering labor costs.
There’s no single formula for determining the ideal mix of services or skills. Some lower-margin services may be necessary to retain strategic clients, while in other cases, rebalancing staff skill sets could strengthen profitability.
What’s certain is that advances in automation and artificial intelligence (AI) will continue reshaping service portfolios in ways that are becoming increasingly difficult to predict.
Photo: Cagkan Sayin / Shutterstock
This post originally appeared on Smarter MSP.