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Capacity utilisation - IT services pyramid

Business Model & Unit Economics · Unit metrics

What it is

The staffing structure of a services firm - many junior engineers under fewer seniors - and the share of billable time actually billed. A steeper pyramid and higher utilisation both lower cost per unit of delivery

AI compresses the base of the pyramid by automating routine coding

Impact on industries

  • The classical margin levers in IT services, and the reason offshore delivery is structurally more profitable than onsite
  • AI automates precisely the routine work the pyramid's base performed, so the traditional model of hiring freshers to grow revenue breaks
  • Revenue per employee becomes the binding metric rather than headcount growth, which requires a different operating model entirely
  • Divergence is already visible in revenue-per-employee gaps between tier-1 firms, so execution on this transition is separating the field

Industries affected