What's Happening?
AI is transforming the consulting industry by automating tasks traditionally performed by large teams of consultants. Richard Karlsson, a former McKinsey expert, highlights how AI is unbundling the consulting value chain, automating research divisions, and compressing deck-building cycles from months to minutes. This shift allows consulting firms to offer clients tools that were previously exclusive to advisory firms. The automation of tasks such as company mapping, market landscaping, and benchmark analysis is reducing the need for large teams of junior employees, whose work is often mechanical and repetitive. As AI systems improve, they are increasingly capable of performing these tasks more efficiently, leading to a potential increase in the number
of projects consultants can handle simultaneously.
Why It's Important?
The integration of AI into consulting is significant as it could lead to a major shift in how consulting services are delivered and priced. By reducing the cost of data and insight generation, AI makes high-end advisory services accessible to smaller companies that previously could not afford them. This democratization of consulting services could lead to an increase in demand, as more companies seek data-driven insights for strategic decision-making. For consulting firms, this means a potential increase in the volume of projects, even as the price per project decreases. However, firms that fail to adapt to this AI-driven model may see their value and client power diminish as AI-first players and clients themselves gain more control.
What's Next?
Consulting firms are likely to face increased competition as AI continues to lower the barriers to entry for providing data-driven insights. Firms that embrace AI and restructure their operations around it may thrive, while those that resist change could struggle. The industry may see a shift towards consultants acting more as strategic partners, focusing on understanding client needs and challenging assumptions, rather than performing manual data gathering and analysis. As AI technology continues to evolve, consulting firms will need to continuously adapt to maintain their competitive edge.
Beyond the Headlines
The automation of consulting tasks by AI raises questions about the future role of human consultants. While AI can handle data-intensive tasks, human consultants will still be needed for their expertise in interpreting data and providing strategic advice. This shift may lead to a redefinition of consulting roles, with a greater emphasis on creativity, critical thinking, and interpersonal skills. Additionally, the widespread adoption of AI in consulting could have broader implications for the labor market, as the demand for certain skills changes.
