Client demands rise as budgets shrink

Client service businesses are facing a widening imbalance between what customers expect and what they are willing to pay, according to new research from Teamwork.com, which says AI is accelerating pressure on speed and cost without eliminating the need for expertise.

The study, 2026 Strategic Shifts, draws on insights from more than 1,000 senior business leaders and Teamwork.com’s global customer community. Among the six major shifts identified for 2026, one of the most immediate is the gap between rising expectations and tightening budgets. Some 66% of leaders said clients are now more demanding but less willing to pay for work.

The findings arrive as service-based businesses contend with several overlapping pressures on growth. Teamwork.com found that 25% of leaders cited economic uncertainty as a key challenge, 24% pointed to price competition, and 23% highlighted rapid technology change, particularly AI. Those pressures are not operating in isolation. As budgets come under strain, businesses are also being asked to deliver faster turnarounds, more visible results, and greater flexibility.

That is where AI appears to be reshaping the client relationship. As generative tools become more mainstream, some customers are starting to assume that work should automatically be quicker and cheaper, even when strategy, project management, and specialist judgement remain essential to delivery. For agencies, consultancies, and other client service organisations, the commercial risk is that productivity gains may be captured by the client rather than retained as margin.

Daniel Mackey, co-founder and CEO of Teamwork.com, said: “AI is changing how work gets delivered, but it’s also creating a new expectation gap — raising expectations faster than it’s lowering the effort required to do great work.”

He added: “As these tools become more mainstream, many clients assume projects should automatically be faster and cheaper. Client service firms need to adapt, but without getting dragged into price wars.”

Teamwork.com’s position is that AI should be used to strengthen execution rather than dilute the value of experienced teams. Mackey said the businesses most likely to succeed will be those using AI to improve outcomes while keeping “a firm grip on time, cost and margins”. That suggests the issue for 2026 is not whether service businesses adopt AI, but how they use it to protect value in a market where expectations are moving faster than pricing power.

The pressure is unlikely to ease quickly. If clients continue to expect more while resisting fee growth, businesses will need sharper ways of defining scope, evidencing value, and using automation where it genuinely improves delivery. The alternative is a market where higher expectations, lower pricing, and margin erosion become increasingly difficult to separate.