Improve Profit Margins in a Consulting Firm India: How One B2B Firm Doubled EBITDA in 10 Weeks

When founders want to improve profit margins in their consulting or professional services firm in India, the instinct is almost always to look at costs.

Cut headcount. Reduce overheads. Renegotiate vendor contracts. These actions feel productive because they are visible and controllable.

However, in the majority of margin problems Adherio has diagnosed across Indian B2B firms, cost is not the issue. The issue is that the business is generating the wrong revenue — and has no system capable of telling the difference.

This is the story of one such engagement. A B2B professional services firm at ₹25–35 crore in annual revenue. Growing top line. Shrinking bottom line. A founder who was working harder than ever and watching profitability quietly erode with no clear explanation for why.

By the time the engagement closed ten weeks later, EBITDA had moved from approximately 8% to 17–18%. No one was let go. No major costs were cut. The revenue base did not change dramatically. What changed was the business's ability to see itself clearly — and make decisions from that clarity.

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The Situation: A Business That Looked Healthy From the Outside

On the surface, this firm had every reason to feel confident. Revenue had grown consistently over three years. The client roster was solid. Retention was good. The founder had built a capable delivery team and had strong relationships across their sector.

Nevertheless, the financial picture told a different story. Despite consistent revenue growth, EBITDA had been contracting year on year. The founder was aware of this trend but could not isolate a root cause. Costs had risen, certainly — as they do in any growing business. However, costs alone did not explain the magnitude of margin erosion.

When Adherio was engaged, the brief was straightforward: find out why the business is becoming less profitable as it grows, and fix it.

The answer, as is often the case, was hiding in plain sight.

The Diagnosis: Three Interconnected Problems

After conducting a structured diagnostic across the firm's commercial operations, pricing architecture, and financial reporting, three interconnected problems emerged. Notably, none of them had been previously identified because the business lacked the visibility tools to surface them.

Problem 1: The Business Could Not See Its Own Margins

The firm produced monthly P&L statements at the company level. However, it had no visibility into margin by client, by project type, or by service line. Revenue was tracked as a single aggregate number.

As a result, a high-margin strategy engagement and a low-margin implementation project appeared identical in the reporting. Both contributed positively to top-line growth. However, their respective contributions to EBITDA were radically different — and the business had no mechanism to distinguish between them.

This is more common than founders expect. Most professional services firms in India at the ₹10–50 crore range operate with company-level P&Ls and no unit-margin visibility below that. Consequently, when the business is growing, the growth masks the underlying profitability mix. The problem only becomes visible when growth slows — at which point the margin damage has been compounding for years.

Problem 2: Pricing Had Drifted Without a Framework

The firm's pricing had been set, implicitly, through a combination of market rates, client relationships, and competitive pressure at the time each engagement was won. There was no documented pricing framework. Therefore, different partners were pricing similar work at different rates depending on their reading of the client's budget and the competitive situation.

Furthermore, pricing had not been systematically reviewed as the firm's capabilities, team size, and market positioning had evolved. In several cases, long-standing clients were being billed at rates that had been set three or four years earlier — rates that no longer reflected the value being delivered or the cost structure of delivering it.

The result was a significant spread in effective margin by client. Some engagements were generating 25–30% contribution margins. Others were generating margins below 5%. Because the business could not see this spread, it was allocating its best people and most senior attention across both categories equally.

Problem 3: Low-Margin Work Was Crowding Out High-Margin Capacity

The third problem was a direct consequence of the first two. Because the firm could not distinguish high-margin from low-margin work, it had no basis for selective acceptance. In practice, the business was accepting almost all work it could win — which sounds commercially sensible but is financially destructive at the margin.

Senior consultant time — which is the firm's most valuable and scarcest resource — was being allocated to low-margin implementation work that could have been declined, structured differently, or repriced. Meanwhile, the firm was occasionally turning away higher-value strategic work because capacity appeared constrained.

In reality, capacity was not the constraint. The composition of what that capacity was being used for was the constraint.

The Intervention: Four Structural Changes Over Ten Weeks

Adherio's engagement did not involve a restructuring, a rebranding, or a cost-reduction programme. Instead, it involved four specific structural changes to the firm's commercial architecture — each one building on the last.

The Outcome: What Changed and What Did Not

Ten weeks after the engagement began, the financial picture had shifted substantially.

EBITDA improved from approximately 8% to approximately 17–18% — effectively doubling the firm's profitability on a broadly similar revenue base. Headcount was unchanged. No major cost lines were cut.

Beyond the financial numbers, three structural changes had been embedded in the business:

• First, the firm now had unit-margin visibility it did not have before. Every month, leadership could see — by service line and by major client — whether the business was becoming more or less profitable and why.
• Second, every new engagement went through a margin assessment before a proposal was submitted. The firm was no longer accepting work without knowing what it would contribute to EBITDA.
• Third, the monthly commercial review had created a standing forum for the kind of portfolio-level judgment that had previously lived only with the founder. Senior leaders were now collectively responsible for the profitability composition of the business — not just their individual revenue contributions.

What This Story Is Really About

The specifics of this engagement — professional services, ₹25–35 crore revenue, margin recovery — will not apply to every reader. However, the underlying dynamic almost certainly will.

Across different industries and revenue scales, Adherio consistently encounters businesses where growth has outpaced the financial control systems needed to govern that growth intelligently. Revenue is tracked. Costs are managed. However, the unit-level economics — the margin contribution of each product, service line, client, or geography — are either invisible or inconsistently monitored.

When those unit economics are invisible, the business cannot make genuinely informed decisions about where to allocate its scarcest resources: its best people, its senior attention, and its capital. It optimises for what it can measure — revenue — and discovers, often too late, that not all revenue is equal.

The fix is not complicated. However, it requires building the visibility systems before the problem becomes a crisis — because by the time margin erosion is visible at the company P&L level, it has typically been compounding at the unit level for several years.

The businesses that scale sustainably are the ones that build these systems early. They are the ones that know, at any given point, not just how much they are making — but precisely where they are making it, and why.