Consulting Giants Grapple with AI Driven Upheaval and Slowing Growth

Management consultancies are confronting mounting challenges against a backdrop of weak global economic conditions and technological upheaval. Accenture, recognised as the largest listed consultancy, has seen its share price fall over 22 percent since the start of the year. The Big Four, comprising Deloitte, EY, KPMG and PwC, have experienced profits stagnating after years of consistent double digit growth, while McKinsey, long a pioneer of the sector, faces slowing profits for the first time in years.

This downturn is attributed to a combination of persistent economic headwinds, corporate disinterest in the environmental, social and governance movement, and falling demand for cloud computing services that previously propelled rapid expansion. To mitigate slowing revenues, leading firms have adopted measures often recommended to their own clients, including significant reductions in headcount. McKinsey has announced its largest job cuts in history, reducing staff numbers from 45000 two years ago to 40000, with a further 4000 roles earmarked for elimination over the next two years. The Big Four have curtailed their graduate recruitment schemes and instituted thousands of redundancies across the United Kingdom.

Consultancies frame these moves as part of a strategic transformation, shifting towards leaner operating models powered by artificial intelligence. Proponents posit that AI adoption will dramatically raise efficiency and enable focus on higher value mandates. McKinsey’s head of AI strategy has described this shift as an existential good, while KPMG’s technology chief asserts that AI will deepen engagement with clients and unlock more strategic work. However, concerns persist that this transformation may backfire. There is apprehension that clients could resist paying similar fees for services delivered by automation, particularly if new technologies fail to meet expectations.

Sector analysts note that workforce reduction is already impacting service quality. Research suggests that job cuts have resulted in overburdened senior staff undertaking the duties of departed junior employees, causing noticeable drops in quality and undermining operational effectiveness. Critics also highlight the cultural and reputational risks of shrinking graduate schemes, noting consultancies risk under-recruiting from the talented pool of prospective clients’ children and associates, historically a source of lucrative relationships and future business.

For graduates who do secure entry level roles, the integration of artificial intelligence poses new challenges. There is a common view that reliance on technology for routine tasks may erode practical expertise and impede professional development. Conversely, sector leaders maintain that junior roles are evolving to incorporate more engaging and substantive responsibilities as technology automates repetitive work.

Adoption of artificial intelligence is exerting downward pressure on industry pricing as clients increasingly expect lower fees for streamlined engagements. Flat revenues in the United Kingdom in 2024 reflect these trends, with clients more frequently demanding discounts or exploring direct use of generative AI platforms rather than traditional consulting support.

The competitive landscape is also shifting as technology leaders such as Palantir, Oracle and IBM expand into consulting services or offer comprehensive process automation. Their emergence intensifies the threat to established consultancies whose business models depend on large teams executing outsourced, lower value assignments for major clients.

While the long term impact of artificial intelligence on management consulting remains uncertain, outlooks within the sector remain varied. Some industry figures promote optimism about further growth and technological evolution; others warn that without genuine innovation, firms risk short term cost cutting at the expense of future competitiveness and relevance. A prevailing observation is that consultancies are prioritising partner remuneration as other areas absorb cutbacks, raising questions about incentives for genuine reinvestment in new capabilities and talent development.