AI Isn’t Killing Consulting, It’s Exposing What Was Already Broken

The Real Issue: Misaligned Business Models

For years, large consulting firms built their economics around a familiar model: a pyramid of junior analysts performing research, analysis and documentation, supported by mid-level managers and senior partners.

Much of that work (research synthesis, benchmarking, slide creation, process mapping) is exactly the type of structured knowledge work that modern AI tools can now perform rapidly and cheaply.

This is where the tension emerges.

As O’Dowd notes, many firms expanded aggressively during the post-pandemic boom and built cost structures around labour-intensive delivery models. When demand normalized, AI became a convenient explanation for margin pressure. But in reality, AI simply repriced activities that were already vulnerable to automation.

The underlying issue was not AI itself, it was the misalignment between firms’ talent models and the type of work clients now value.

Consulting Isn’t Shrinking, It’s Evolving

Interestingly, the consulting industry is not actually contracting.

In fact, forecasts suggest the market may grow around 7% this year, driven largely by AI implementation, infrastructure, and operating model redesign.

This highlights an important paradox:

AI is compressing some traditional consulting activities, yet simultaneously creating new advisory demand.

Organizations need help with:

• AI strategy and adoption
• Data architecture and governance
• Operating model redesign
• AI-enabled workflows and decision processes
• Change management and workforce transformation

Historically, every major technological shift, from ERP systems to cloud computing, has been a boom period for advisory firms. AI appears to be following the same pattern.

The Real Differentiator Isn’t AI Access

Another key insight from the discussion is that AI itself will not be the differentiator between consulting firms.

Access to models and tools is becoming increasingly commoditized.

Instead, competitive advantage will come from:

• Workflow design: how knowledge, tools and processes combine into repeatable solutions
• Institutional knowledge: sector expertise and accumulated insight
• Decision infrastructure: the frameworks and governance structures enabling better executive decisions

In other words, the value shifts from producing analysis to enabling decisions.

The Changing Shape of Consulting Teams

AI is also reshaping how consulting teams operate.

Traditional pyramids are likely to evolve into leaner delivery models, where smaller teams combine senior expertise with AI-driven analytical capability.

Rather than large teams producing slide decks, consulting may increasingly revolve around:

• smaller, specialized teams
• faster analysis cycles
• deeper sector expertise
• greater accountability for outcomes

In many ways, this could favour specialist boutiques and advisory firms that already operate with leaner structures and domain expertise.

A Shift From “Advice” to “Impact”

The deeper shift may be philosophical rather than technological.

Clients are becoming less interested in:

• analysis they could generate internally
• generic frameworks
• large reports or presentation decks

Instead, they are increasingly seeking partners who can:

• interpret complex information
• provide judgment in ambiguous situations
• guide major strategic decisions
• help implement real organizational change

AI may automate information, but it cannot replace context, judgment and trust – the core ingredients of effective advisory work.

The Bottom Line

As James O’Dowd concludes in his article, AI is not eliminating consulting. Rather, it is highlighting structural weaknesses that already existed within parts of the industry, particularly delivery models heavily reliant on large teams performing repeatable analytical work.

In that sense, AI is less a disruptor and more a diagnostic tool, exposing where traditional consulting models have struggled to adapt to changing client expectations and advances in technology.

The article suggests that firms able to evolve their operating models, moving beyond labour-intensive delivery toward deeper expertise, smarter workflows and more decision-oriented advisory, are likely to remain highly relevant. Meanwhile, those that rely primarily on scale and traditional pyramid structures may find the transition more challenging.

Ultimately, the conclusion is not that consulting is disappearing, but that the industry is entering a period of structural recalibration as AI reshapes how knowledge work is delivered and valued.