ServiceTitan Report: Rising Labor Costs Push Contractors Toward Efficiency and Automation
Key Highlights
- 74% of contractors see AI as vital for operational efficiency, but only 25% are actively using it, indicating a gap between interest and implementation.
- Over half of respondents are uncertain about how to start with AI, citing concerns over costs, trust, and system limitations.
- Customer retention now surpasses new customer acquisition, with faster response times and improved communication becoming key differentiators.
LOS ANGELES — A new report from ServiceTitan finds that artificial intelligence is emerging as a key driver of efficiency for residential contractors, even as adoption across the industry remains limited.
According to ServiceTitan’s 2026 Residential State of the Trades Report, based on a survey of 1,000 residential contractors, 74% view AI as an important tool for improving operational efficiency. However, only about 25% report actively using AI in their businesses, indicating a gap between interest and implementation.
Early adopters are already seeing measurable operational benefits. The report shows that 48% of those using AI report increased productivity, while 45% cite time savings. These gains are largely tied to automation of routine tasks and improved decision-making capabilities.
ServiceTitan notes that many contractors see long-term value in early adoption. The report found that 73% believe implementing AI sooner rather than later can create a competitive advantage. At the same time, more than half of the respondents report uncertainty about where to begin, while others cite concerns related to cost, trust, and system limitations.
The findings reflect a broader shift in how contractors approach growth. While 66% still identify revenue growth as a top priority, the strategy is evolving. Customer retention, cited by 53% of respondents, now outweighs new customer acquisition at 31%, signaling a move toward maximizing existing customer relationships.
Rising costs are also reshaping operational priorities. The report indicates that 60% of contractors view labor and overhead expenses as their biggest business risk, with ongoing labor shortages continuing to impact operations. In response, many are focusing on improving efficiency rather than relying solely on price increases or workforce expansion.
Execution speed and service quality are becoming more critical in a competitive market. More than half of contractors report responding to new leads within the first hour, as delays can result in lost opportunities. Customers increasingly expect faster response times, transparent communication, and convenient service experiences.
According to ServiceTitan, contractors are turning to automation and integrated technologies to meet these expectations. Tools that streamline scheduling, improve workflow visibility, and enhance communication are helping businesses convert more leads into revenue while maintaining operational control.
The report concludes that competitive advantage in the residential trades is shifting away from demand generation and toward execution. Contractors that improve technician productivity, optimize workflows, and leverage real-time performance data are better positioned to protect margins and drive profitable growth as technology adoption expands.