Even if AI doesn't help with any aspect of the service itself there are a ton of efficiency gains to be had from "the rest" of the work, which will make service margins less ugly. Every business still neeeds some form of sales and/or marketing, support, and back office administration.

And for a lot of services there'll be creative ways to squeeze efficiencies from tech/AI. For example roofing businesses used to send a guy to your house to give you an evaluation + quote; increasingly, they now send drones (https://www.roofer.com/).