Modest Revenue GrowthLow single-digit revenue growth constrains the scale benefits of a consulting and software services model. Limited top-line momentum can cap operating leverage gains, restrict market share expansion, and make it harder to fund larger strategic initiatives without margin tradeoffs.
Gross Margin PressureA declining gross margin in a labor- and project-intensive business signals cost inflation or mix shifts. If persistent, this erodes the buffer that funds SG&A and R&D, forcing either price increases that risk competitiveness or margin compression that reduces free cash flow.
Mid‑market Consulting CompetitionA consulting-led SMB focus exposes the firm to intense competition, pricing pressure, and client consolidation risks. Low switching costs and larger integrators targeting mid‑market clients can limit long-term margin expansion and require continual investment to differentiate services.