I am a business interested in your listed service
I am an expert interested in your network
I have a project in mind
I can’t find a specific service
I’d like to discuss something else
I’d like to join your expert network
I offer a service that's not listed
I'd like to discuss something else
Gen AI is both an exciting opportunity and an existential threat to all consultants. There is no question Gen AI will have a transformation effect on consulting, but the jury is out on the “what and when” of the changes. The good news is that, notwithstanding current growth headwinds, global demand for management consulting is expected to grow by 10% CAGR to 2031, driven by the rapid pace of change. This will only increase with the impact of Gen AI.
The large consultancies are very adept at innovation and are investing billions and billions in the development of Gen AI services for their clients and own businesses. Client expectations of consulting value will also increase exponentially with Gen AI — it will be much (much) harder to sell armies of smart, inexperienced junior consultants for tasks expected to be done by AI solutions. Clients will want more senior consultants with real business experience, smarter (better, faster, cheaper) consulting solutions, and fewer junior consultants.
This points to a fundamental profitability and operating model challenge facing consultants. Most larger consultants operate a pyramid model with Partners/Directors focussed on selling work (keeping the armies busy) as a means of making more money and gaining promotion, with their actual client work may be 25-45% of their time at best.
So, what will they do? Re-skill and/or hire fewer junior consultants, get more Partners/Directors back on the tools and delivering more client and actual billable work, increase their subsidised daily rates (tough), hire (and pay) more experienced consultants, and of course, nirvana, the productisation of their knowledge and solutions (money whilst they sleep!). The latter requires a truly entrepreneurial “sink or swim” start-up mindset, feels like a great transformation project for consultants!
Gen AI will undoubtably have a profound impact on the economics and operating model of the larger consultancies. It is a fascinating challenge, and as to how this will play out, only time will tell. It is a challenge I am sure will be keeping many global and local consulting leaders awake at night.
