Most services businesses track aggregate margin. Without client-level profitability reporting, they cannot identify which relationships are generating it, which are eroding it, or how large the spread between them is. The operators who fixed this built the visibility first, then used it to make decisions their competitors could not.
Most services firms can tell you their overall gross margin. Fewer can tell you the margin on their top twenty clients. Fewer still can tell you which of those clients would be underwater if you allocated indirect costs accurately. This is not a data problem. The contracts exist, the timesheets exist, the invoices exist. The problem is that assembling that information into a coherent client-level P&L requires someone to decide they want to see it, and seeing it has consequences. Pricing assumptions get exposed. Relationships that leadership has described as "strategic" turn out to be subsidized. The accounts your best people spend the most time on are frequently not the accounts generating the most profit. Most firms prefer the ambiguity.
The ones that built visibility and acted on it compounded the benefit fast. Cushman & Wakefield identified which service contracts were performing and imposed a set of structural disciplines: minimum scope floors, indexed fees, exit provisions for contracts that couldn't meet them. The results were not incremental. Net income swung from a loss of $35.4M in FY2023 to a gain of $131.3M in FY2024. By FY2025, revenue had reached a record $10.3B, EBITDA was up 13% to $656.2M, and free cash flow surged to $293M, enough to prepay $300M in debt. None of that is possible without first knowing, contract by contract, what you actually have. -> Cushman & Wakefield
CBRE's restructuring of its GWS segment created formal management reporting at the segment P&L level that had not previously existed as a structured discipline. The immediate operational payoff was 12-to-18-month renewal pipeline forecasting, by contract. That meant resource allocation decisions, pricing negotiations, and client investment were all happening against actual numbers rather than blended assumptions. GWS segment operating profit rose 17% in 2022. In the first full reporting period after the new structure was in place, CBRE posted its highest Q1 revenue and adjusted EPS in company history. GAAP EPS climbed 143% in FY2021. -> CBRE Group
ISS ran the same play at greater organizational complexity. The OneISS strategy, launched in December 2020, required consolidating fragmented regional P&Ls into unified reporting. Before that consolidation, ISS could not reliably see profitability by account, by geography, or by service line simultaneously. Once they could, renewal investment concentrated where it had the highest expected return. Key account retention reached 95% in FY2023, described by management as the highest in the company's 120-year history. Organic growth hit 9.7% in the same year. Operating margin moved from 2.5% in 2021 to 4.6% underlying in FY2023 to 5.0% in FY2024, a 250-basis-point improvement over three years. -> ISS A/S
The most common failure is building the reporting and not acting on it. This is more prevalent than it sounds. A firm commissions a client profitability analysis, sees the results, and then finds reasons why the bottom quartile is complicated. The unprofitable client has a relationship with the CEO. The account is in a market the firm wants to grow into. The contract is up for renewal soon and "now isn't the right time." Twelve months later, nothing has changed except that the firm now has data confirming what it was already doing. The analysis becomes a document rather than a decision.
Partial visibility is a related trap. Seeing margin at the segment or division level is better than nothing, but it still allows the worst accounts within each segment to be subsidized by the best. A division with an 18% margin might contain five accounts running at 30% and three running at negative. The segment average obscures both the opportunity and the problem. Segment-level visibility tells you which parts of the business to look at. It does not tell you what to do.
The organizational resistance to client-level margin is worth naming directly, because it is the real constraint. Sales teams resist it because it reframes their largest accounts as potential liabilities. Account managers resist it because their relationships become legible as economics rather than relationships. Executive sponsors of low-margin clients resist it because it puts them in the position of defending something that can now be quantified. In each case, the resistance is dressed up as strategic nuance: "that client opens doors," "we're investing in the relationship," "the lifetime value is higher than the current numbers show." Some of that is occasionally true. Most of it is not.
Capita accumulated more than 100 acquisitions over two decades without building a consolidated view of contract-level profitability. Overhead could not be accurately allocated, and contracts were priced against cost assumptions that did not hold once examined at the individual account level. During the restructuring review, the hidden margin destruction that had accumulated across years became visible. More than 30 businesses were disposed of in a programme generating £1.3B in proceeds. The significant detail is that these businesses were not obviously loss-making on paper. Their underlying economics only became clear when someone looked at each one individually and stopped letting aggregate numbers absorb the losses. -> Capita
Start with the most basic version of the question. Can you produce a P&L by client and by contract, with indirect costs allocated on a defensible basis rather than omitted or spread evenly? If the answer is no, the rest of the diagnostic is premature. The first task is building that capability, which means agreeing on an allocation methodology and accepting that some of the numbers it produces will be uncomfortable.
If you can produce that view, the second question is about where your best people are deployed. High performers in services firms tend to accumulate on the largest accounts, because that is where the most visible work happens and where internal political weight is concentrated. The question is whether that deployment is correlated with your most profitable accounts or just your biggest ones. In most firms, the correlation is weak. The clients getting the most senior attention are frequently not the clients generating the most margin per dollar of revenue. Fixing this is harder than it sounds, because it requires overriding the internal logic that has been rewarding people for running large accounts regardless of those accounts' economics.
The third question turns the analysis forward. If you applied a minimum margin floor to your renewal book today, what percentage of contracts would qualify without repricing? That number tells you the scope of the problem. If the answer is 60%, you have a manageable repricing and exit agenda. If the answer is 30%, you are looking at a structural rebuild of your client portfolio, and the sooner you begin, the more options you have. The firms that extracted durable margin improvement from this kind of exercise -- Cushman, CBRE, ISS -- all made the same underlying commitment: they decided that the output of the analysis would determine what happened next, not the other way around.
Read these alongside the playbook — look for what each company had in common, and where their approaches diverged.
Cushman & Wakefield turned net income positive to $131.3M in FY2024 by imposing services contract discipline.
Services Contract Discipline Driving Margin Expansion and Record Revenue
CBRE Group grew GAAP EPS 143% in 2021 by restructuring its operating model and resetting governance.
Operating Model Restructuring and Governance Reset Driving 143% EPS Growth in 2021
ISS grew organic revenue 9.7% in FY2023 and hit record 95% retention by embedding price escalators in contracts.
Contract Structure and Built-In Price Escalators
Capita achieved £305M in sustainable cost savings by 2020 by restructuring governance and disposing of non-core assets.
Five Years, £305M in Savings, One Rights Issue: Anatomy of a BPO Turnaround