Why Will AI Impact Consultancy?

As a consultancy in the field of artificial intelligence (AI), it would be unreasonable not to comment the impact and scale of disruption of AI on consultancy and professional services.

In 2021, estimates of the global consulting services market varied between £525bn to £675bn. With this size of expenditure, as knowledge and understanding of AI increases and becomes more commonplace, the outsourcing of routine tasks using AI systems by clients will (rightfully) disrupt the consulting industry. 

AI systems that ‘look back’ to explore common problems and provide independent advice, typically the work of consultants, will become readily available to clients at low or nil cost. Combined with AI’s capability for search and content generation, at some time in the future AI systems will most likely provide better value services than many consultants employed to undertake the same tasks. This is a challenging but real scenario.

In effect, some of today’s consultancy activities could be in-sourced by clients who would use their own AI systems, rather than consultants, in areas such as:

  • Research and analysis
  • Professional and technical advisory services
  • Report and presentation content creation
  • Project management

In today’s consultancy industry, services are reliant on people doing the work with the consultancy business model based on charging clients for the ‘time and materials’ expended. The replacement of consultancy services that can be delivered by client-owned AI is a significant threat to the current level of revenues in the consultancy industry. Although consultant-owned AI could be the foundation for high premium and rapidly scalable consultancy services.

This inevitable change in the balance of capability will demand a change to the type of value created by consultants. Consultants will need to add more value using their human intelligence, knowledge and understanding of context - but AI-enabled in-sourcing by clients means they will pay a lower overall cost for the equivalent service outcomes.

With a proliferation of consultancy since the 1980’s and creation of an industry in its own right, concerns are already surfacing about the value-add of consultancy services given their business models. Much of this growth in consultancy has been around the location of capability - client vs. consultant - and AI products and services will change this split since a client’s own internal capability can be increased at much low cost.

In this scenario the balance changes between the value-add of external consultancy and the value-add of internal AI systems adopted by the client. But their combination should lead to an increase in collective value-add and intelligence.

“The challenges we face today demand ambitious responses, from the climate crisis to population health.  We can do this if government, businesses and civil society foster collective intelligence and mutualistic capacity”.

Marianna Mazzucato and Rosie Collington – The Big Con (2023)

The Wider Impact of AI

In the same way the 18th Century industrial revolution made an irreversible impact on businesses, jobs, society and the economy, AI will do the same. The industrial revolution led to the replacement of a manual agricultural economy and one where products were made by hand - to a manufacturing economy with increased production capacity at lower unit costs. 

People moved on mass to urban areas, their jobs changed, and they had to learn new skills.

As AI becomes more ubiquitous, similar scale economic and societal changes will be triggered. 

Both low-skilled and medium-skilled jobs will be lost, especially in the service industry. The innovation cycle will be shorter with more products and services coming to market much faster. 

Business models will need to adapt, including those of consultants.