Your sales team is working harder than ever. Your close rates are dropping. Let’s talk about why.

I’ve been having the same conversation with PS firm leaders for the past six months. It starts casually. “How’s business?” And then they pause. Not the confident pause of someone about to share good news. The other kind.

“Pipeline feels… different.”

Different is the word everyone uses. Not bad, not slow, not dead. Different. Like something shifted and they can’t quite name it.

Let me name it.

The Math Changed

Here’s what I’m hearing from executives across the industry: Proposals that used to close in 60 days are taking 90. Deals that needed eight consultants now get questioned at five. The “let’s wait and see” objection keeps showing up, except what clients are really saying is: “We’re not sure we need you anymore.”

That’s not a budget problem. That’s an existential one.

Two years ago, if an enterprise needed to build a customer portal, they called you. They didn’t have enough developers. They didn’t have the specialized skills. They needed bodies and brains, and you had both.

Today? Their internal team just got a lot more productive. Copilot is everywhere. Claude is in their browser. Cursor is on their senior developers’ machines. A team of five is doing what took eight people twelve months ago. They’re not cutting your budget because money is tight. They’re cutting it because their own people don’t need as much help.

The arbitrage that built this industry (access to skilled developers when enterprises couldn’t hire fast enough) is evaporating. And most firms are too busy celebrating high utilization numbers to notice.

A Story From Last Month

A colleague at a staff aug firm shared this one with me recently. Long-term client relationship, solid track record, good rapport. The client needed to modernize a legacy platform. Complex work. The kind of engagement that used to be a layup.

The firm put together a smart proposal: a seasoned architect to guide the technical direction, an experienced project manager to keep things on track, and a cost-appropriate Manila team to do the heavy lifting alongside the client’s internal developers. Reasonable scope. Competitive pricing. The kind of deal that should close.

It didn’t.

After a long sales cycle, the client decided to do the whole thing in-house. Not with a competitor. Not with a different approach. Just… internally.

Here’s what we know: that client has been adopting AI tools aggressively. Their internal developers are moving faster than they were a year ago. And leadership has made it clear they want to minimize contractors in 2026.

This isn’t one data point. This is the pattern.

The proposal wasn’t wrong. The relationship wasn’t broken. The math just changed. When your client’s internal team is 30% more productive with AI assistance, the calculus on “build vs. buy help” shifts. And it’s shifting faster than most firms want to admit.

The Questions You’re Not Asking

When’s the last time you asked your sales team about average deal size, not just total pipeline? When’s the last time you looked at the ratio of heads on proposals versus two years ago? When’s the last time you asked a client what tools their internal developers are using?

IMHO, these are the questions that matter right now. Not “how do we keep our people busy?” but “do we have the right people at all - because clients aren’t buying what we built our firm to deliver.”

I talked to a VP of Sales at a mid-size PS firm last month. Sharp guy, twenty years in the business. He told me something that stuck with me: “The deals that used to be automatic aren’t automatic anymore. We’re losing opportunities we would have closed two years ago - not to competitors, but to ‘we’ve decided to handle it internally.’”

That’s the pipeline problem in one sentence.

The Blended Model Is Under Pressure Too

Now, if you’re running a project-oriented firm with an Agile mindset, you might be thinking: “This doesn’t apply to us. We’re not a body shop. We sell integrated teams - architects, PMs, developers working together with a delivery methodology.”

Fair point. Pure staff aug has been a commodity for years. The firms that survived the last decade did it by evolving past “here are some developers” into something more valuable: full Agile teams, outcome-oriented delivery, strategic partnership.

Here’s the problem: that model is now under the same pressure.

When enterprises needed help building an Agile capability they didn’t have, the value proposition was obvious. You brought the methodology, the roles, and the experience they couldn’t hire fast enough. But what happens when their internal teams - armed with AI tools - can move faster with fewer people? When the calculus shifts from “we need outside help to get this done” to “we can probably handle this ourselves now”?

The differentiation that protected project-oriented firms from the commodity trap is eroding. Not because the work isn’t valuable, but because clients are reassessing how much external help they actually need.

The firms that keep selling the same blended model will find fewer buyers. The ones that figure out how to deliver outcomes clients genuinely can’t achieve internally? They’ll define the next era.

What Your Clients Aren’t Telling You

Clients are polite. They don’t call you up and say, “Hey, we don’t need as many of your people because our developers are 30% more productive with AI tools.” They just… ask for smaller teams. Extend timelines. Ghost on that follow-up call.

The “let’s wait and see” objection isn’t about economic uncertainty. It’s about capability uncertainty. Enterprises are genuinely unsure how much external help they need in a world where their own people can move faster than ever before.

That’s not a sales problem you can solve with better discovery questions. It’s a business model problem that requires rethinking what you’re actually selling.

The Good News (Yes, There Is Some)

The enterprises I talk to still need help. Desperately, in some cases. But what they need looks different than what most PS firms are selling.

They need partners who can help them figure out which AI use cases actually matter for their business. They need forward-deployed engineers who can get POCs to production, not just build prototypes. They need expertise in ML Ops, data pipelines, and organizational change management. They need someone to help them escape pilot purgatory.

The demand is there. The question is whether your firm is positioned to meet it.

Look at Your Own Numbers

The bottom line is this: If your pipeline feels different, it’s not your imagination. It’s the market telling you something.

Pull your CRM data from the last two years. Look at average team sizes on closed deals. Look at sales cycle length. Look at win rates by deal type. The patterns will tell you what your clients won’t say out loud.

I’m not asking you to take my word for it. I’m asking you to look at the evidence sitting in your own systems.

The firms that diagnose this honestly will have time to adapt. The ones that explain it away as “a tough quarter” or “clients being cautious” will find themselves scrambling when the new model is already locked in.

Which one do you want to be?

John Doucette is the founder of The Disruption Brief, where he writes about the AI transformation reshaping IT professional services. With 34 years in the industry, from developer to CTO, he’s focused on helping PS firms navigate disruption before it’s too late. Connect with him on LinkedIn.