The consultancy AI crisis: Can the industry giants rebuild a broken model?

For decades, consultancies have served as the default mechanism for plugging companies’ capability gaps and validating high-stake decisions at the boardroom table.

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What began in the 1980s with post-merger integration support soon evolved into a multi-line model converging strategy, technology, and human capital services into repeatable solutions. The subsequent productization of consulting created firms that thrived on embedded relationships, high contract velocity, and the perception of unrivaled expertise. 

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However, that consulting model is starting to fray.

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Initially seen as another domain to be outsourced, AI is reshaping the industry. As companies gain direct access to the tools and intelligence once gated behind advisory retainers, their dependency and justification for legacy consulting spend is declining.

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The consulting model is facing its most severe inflection point in decades. Can it evolve from selling prepackaged expertise to building dynamic, AI-enabled capability? Or will it be disrupted by a new generation of tech-native transformation partners?

AI accelerates companies’ internal capability building  

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Originally brought in to manage acquisitions some 45 years ago, consultancies quickly evolved from niche advisors into multi-service giants. Their success led to firms packaging expertise into modularized solutions that covered strategy, operations, and digital transformation.

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Over time, legacy relationships and long-term system maintenance contracts cemented their dominance, propelling firms like McKinsey to record $16 billion revenue figures in 2023.

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But the clarity of their value proposition is fading. Take McKinsey’s role in advising CNN on CNN+ - the streaming service that was shut down just one month after its launch in 2022. In an economy characterized by tighter budgets, clients want to pay for outcomes, not hours. 

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While many firms initially turned to consultancies to navigate AI adoption, the legacy relationships are eroding. As tools like SWOT analyses, market scans, slide decks, and basic financial models can now be instantly generated, companies are increasingly focused on insourcing capability and AI is here to accelerate that shift.

Junior roles are set for AI-driven transformation 

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The arrival of AI doesn’t spell the end of consulting. Instead, it marks a significant shift in how the industry creates and delivers value.

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Routine, executional tasks historically delegated to junior consultants - slide formatting, code snippets, baseline research - are now largely automatable. Tools like ChatGPT, Claude, and domain-specific copilots have ended the era of billing clients for grunt work.

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In its place, AI literacy is emerging as the baseline expectation for junior talent. The ability to prompt, refine, and sense-check AI outputs will be as fundamental to their toolkit as Excel once was. Rather than spending hours crunching data or polishing decks, they will focus on applying AI-generated outputs, ramping up domain expertise and sharpening strategic thinking much faster.

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Yet technical expertise alone won’t be enough. Instead of onboarding junior talent for repetitive execution, firms will need to accelerate their development in judgment, communication, and collaboration - the distinct human capabilities that AI can’t replicate, but consulting still depends on.

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Building an AI-skilled consultants at every career level

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The impact of AI isn’t limited to junior roles. AI proficiency is becoming non-negotiable at every level of the consulting career ladder.

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As clients gain access to AI copilots, the knowledge gap that once justified expensive advisory retainers is shrinking. Clients don’t want a consulting partner to explain the landscape - execution is becoming the new currency.

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This demands a different consulting profile. Firms can no longer rely on generalists armed with frameworks. Instead, they need sharp, AI-literate experts who understand automation, data integration, and real-time implementation, paired with the influencing skills to drive change across complex stakeholder groups.

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Internally, consultancies must upskill fast. Recruitment, onboarding, and capability development must be rebuilt for an AI-first era. Future-fit consultants won’t just advise on transformation, they will develop the skills to lead it. And firms that struggle to retrain their workforce for AI risk being outpaced by leaner, AI-native competitors.

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The AI wake-up call demands fit-for-future consulting

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The old consulting formula of time-heavy processes, junior grunt work, and vague value propositions will no longer secure high-value contracts. Legacy firms that continue reselling generic expertise will quickly be overtaken by lean, AI-native competitors engineered for speed, precision, and measurable outcomes. 

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To stay relevant, the industry must shift from reselling knowledge to enabling capability. That means investing in new internal skills from AI literacy to stakeholder influence and rethinking the junior talent model to produce strategic copilots. 

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The consultancies that survive the AI shift won’t be the ones with the longest decks or strategy plans, but the ones that rebuild their value from the ground up and re-establish themselves as indispensable AI transformation partners.

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In many ways, it’s a return to the industry’s origins: not all-purpose advisors, but specialists built to solve the next problem.