The consulting industry is at a pivotal moment where AI democratizes access to high-level expertise and capabilities. New data from 384 industry experts reveals that small, AI-powered teams can now compete with traditional consulting giants, deliveri
Does AI in Consulting Spell Democratization … or the End?
I asked 384 consultants, and here is the answer…
A two-person consultancy wielding AI in consulting could soon outbid McKinsey for Fortune 500 contracts
Editor’s Note: A version of this piece originally appeared in two parts on Work Smarter with AI.
What is the future of AI in consulting?
Let me put it this way:
It will soon be possible for a two-person AI-powered consultancy to outbid McKinsey for a Fortune 500 contract. Sound far-fetched? Think again.
My journey into this rabbit hole started on a sunny day in Madrid—the South Summit 2024 was in full swing.
I'd just wrapped up my last meeting of the day. Sweat-soaked and brain-fried, I caught a phrase that cut through the haze:
"80% of consulting will vanish because of AI."
B.S., I thought. Then I paused.
What if it's true? What if maybe—instead of killing consulting—AI could do the opposite … democratize it?
You’re about to read a data-driven journey into AI’s effect on consulting—major shifts, trends in consultants who leverage AI, the economics behind these shifts, barriers, and the path forward.
These takeaways are the combination of 384 conversations with consultants, loads of data, and these sources:
Let’s dig in.
We're moving from the “knowledge” to the “allocation” economy in consulting. In this new paradigm, success means acquiring critical knowledge and effectively leveraging AI to apply that knowledge at scale.
Due to this paradigm shift, six fundamental shifts are occurring in the consulting landscape, each powered by AI's democratizing force:
The AI Maturity Index reveals that consulting's AI transformation is well underway, though unevenly distributed. Despite consultants averaging 40+ years in age, nearly half (48%) use AI tools daily, with the most experienced professionals embracing technology at rates 25% higher than their younger colleagues—challenging traditional narratives about technology adoption amongst younger generations.
Female consultants are leading the creative AI revolution, 30% more likely to leverage these tools for idea generation and client deliverables. Meanwhile, the psychological benefits are becoming apparent as consultants report 30% less stress and 45% better work-life balance thanks to AI. However, with consultants ranking only third in innovation scores (40/100) and fourth in psychological impact (59/100), substantial untapped potential remains for firms willing to bridge the implementation gap.
Here are some other notable takeaways about how consultants are using AI:
But on the horizon are AI agents. And as their use becomes widespread, the consulting transformation will only accelerate.
AI agents are quickly accelerating capabilities for AI in consulting, streamlining complex workflows, managing complete processes independently, and allowing consultants to dedicate more time to strategic analysis and planning.
BCG describes an “Observe, Plan, Act” cycle that demonstrates the potential for AI agents. AI systems are bridging the gap between knowledge and execution—they’re now active partners in work processes.
In combination with agentic AI, tasks enhanced by AI are reshaping each stage of the consulting process, opening new doors for agile, innovative firms ready to embrace the future. Here are a few examples of what that transformation looks like:
Despite high awareness (95%) and interest (88%) in AI, only 48% of consultants use AI daily. Before we can realize AI's full potential in consulting, we must address five key barriers:
Here’s how I see AI playing out in consulting in the next five years:
AI dramatically alters the consulting landscape by significantly reducing the time and resources needed to execute ambitious initiatives. The recent launch of OpenAI's o1-preview model exemplifies this shift, with consultant Shep Bryan testing o-1 preview by demonstrating how it generated a comprehensive strategy deliverable in one request—a task that would typically require an entire McKinsey team to complete.
Similarly, Claude Artifacts enables consultants to create interactive documents, data visualizations, and website designs without extensive technical expertise. This democratization of advanced capabilities raises questions about the traditional value of experience, potentially disrupting consulting hierarchies as "moonshot" projects become accessible to smaller teams.
Pat Grady, Partner at Sequoia Capital, emphasized this shift: "One of the big opportunities for AI is to replace services with software." This reflects the emergence of several key service models in consulting:
Anthropic's breakthrough in AI system capabilities (14.9% success rate, rising to 22% with additional steps) signals a fundamental shift in work coordination through a "New Management Stack":
The consulting industry stands at the cusp of a revolution where new revenue models are emerging beyond hourly billing, centered on scalable solutions and continuous value. Those who invest in continuous learning to stay ahead of AI developments while building technical and soft-skill expertise will be positioned to deliver Fortune 500 insights with startup-sized teams.
The future isn't humans versus AI, but humans and AI versus complex problems. This AI revolution represents the most significant opportunity in consulting since the invention of the spreadsheet—a chance to solve previously unsolvable problems with unprecedented efficiency and insights.
DM me on LinkedIn to chat about this 🙂
AI represents an opportunity rather than a threat to consulting—it's the biggest industry advancement since the invention of spreadsheets. While it will disrupt traditional consulting hierarchies and business models, AI enables consultants to deliver more value, tackle more significant problems, and serve previously unreachable markets. The key threat isn't to consulting itself but to consultants and firms who fail to adapt to this new paradigm. Those who embrace AI-first workflows and develop new business models will find unprecedented opportunities to scale their impact and compete with industry giants.
The future of AI in consulting is centered on AI-augmented services and new business models that combine human expertise with AI capabilities. We're moving toward a "New Management Stack" where AI handles coordination and execution while humans focus on strategy and stakeholder management. AI agents will increasingly manage routine tasks and analysis, enabling consultants to take on more complex challenges. The industry is shifting from traditional project-based models to subscription services, continuous insights platforms, and outcome-based consulting.
While AI is transforming consulting, it's not replacing the industry—it's democratizing it. The human elements of consulting, such as creative problem-solving, emotional intelligence in client relationships, and nuanced strategic thinking, remain crucial. Instead of replacement, we're seeing a shift toward AI-augmented consulting, where professionals leverage AI to enhance their capabilities and deliver more value. The real change is in how consulting services are delivered and scaled, not in their elimination.
In consulting, AI is revolutionizing every aspect of the process, from client acquisition to final deliverables. Consultants use AI for automated data gathering and analysis, creating detailed market research reports, generating preliminary client recommendations, and developing sophisticated financial models. AI tools handle routine tasks like document creation and data visualization, while consultants focus on high-value strategic thinking and client relationships. The technology is compelling in creating scalable solutions that were previously only possible with large teams.