Deloitte’s internal event has sparked outrage among its own consultants. Management message: The classic hourly business model is under enormous pressure in the age of artificial intelligence.
Jason Munstoff, Deloitte’s US public sector consulting leader, last month presented a graph showing the decline of the hourly consulting business by 2035, according to a Wall Street Journal report. The green bar at the bottom, which represents the industry’s core business, shrinks to a narrow strip of the entire market.
“The not-so-good news is that this type of work, while it will be a significant part in 2035, will only be part of the bigger picture,” Munstoff said in a webcast seen by the WSJ. Meanwhile, AI agents, currently in the early stages of their development, will grow exponentially and make up the majority of the expanding professional services market by 2035.
A Deloitte consultant summed up the event for the WSJ: “They have made it abundantly clear that our model is over. Essentially, we are being replaced by robots.” A Deloitte spokesperson said the company is making “significant investments to lead this human-led, AI-powered transformation of our industry.”
It’s hard to say goodbye to billable hours
The consulting industry is trying to reinvent itself by operating more and more like a software or product business. Instead of renting out people’s time, you should sell fixed-price subscriptions or fixed-rate solutions. But the transition is rocky: If projects take longer than planned, companies are forced to cover costs themselves, payments become unpredictable, cash flow problems arise, and disputes over subjective measures of success can damage customer relationships.
McKinsey and Boston Consulting Group are increasingly relying on performance-based pricing models. More than 30 percent of McKinsey’s global revenue already comes from such models, according to senior partner Shelley Stewart III, the WSJ reported. However, Pat Petitti, CEO of AI consulting platform Catalant, sees this less as a philosophical solution and more as an “existential struggle” for new revenue models: “AI is disrupting their business model.”
AI news without the hype – curated by people
WITH DECODER-Abo you read without advertising and become part of our community: discuss in the comment system, receive our weekly CI newsletter, CI Radar Frontier newsletter 6 times a year with the latest developments in artificial intelligence research, up to 25% discount CI Pro-Events and access to complete archive for the last ten years.
Subscribe now