How AI is changing consulting fees and graduate hiring
Artificial intelligence is challenging the building blocks of the consulting industry, from the fees firms charge clients to the armies of graduates who have traditionally powered its business model.
Svilena Tzekova, KPMG’s London-based global head of consulting, agreed that the industry is changing. The intellectual property and knowledge that once formed the basis of consulting work are becoming increasingly accessible, she said, so clients have higher expectations than ever before.
We were making quite a lot of money by providing advice. I think that part of our business is literally nonexistent anymore
“Anyone can go and very quickly get to the level of advice that we used to deliver within whatever days or months at times,” Tzekova told CNBC. “We were making quite a lot of money by providing advice. I think that part of our business is literally nonexistent anymore.”
Pricing models
But the industry has yet to work out exactly how to charge for this new kind of work. Although clients increasingly say they want to pay for outcomes, their procurement departments still tend to compare consultancies on the number of people assigned to a project and their hourly rates, Tzekova said.
AI is also introducing new costs that firms need to factor into their pricing models, including computing power and the fees AI providers charge based on how much text their models process, alongside the traditional costs of employing people, she said.
“It’s very difficult to be able to arrive at a commercially sensible outcome-based pricing model,” Tzekova said. Largely, firms are still working out the equation, and that will take some time, she said.
AI-native consultancies
Smaller, AI-native consultancies hope to gain a competitive advantage as the likes of the Big Four — professional services giants Deloitte, PwC, EY and KPMG — race to modernize.
The KPMG offices stand in 15 Canada Square, Canary Wharf, London, England.
Jack Taylor | Getty Images News | Getty Images
Emiko Caerlewy-Smith, head of investor relations at London-based challenger consultancy Elixirr, argued that firms like hers are better positioned for the AI era. She said they’ve never billed clients on a time-and-materials basis, which means charging for the hours staff spend on a project.
“AI is amplifying and exaggerating the way that we were already trying to show up to the market,” Caerlewy-Smith told CNBC. “Clients will pay for fixed deliverables, fixed outcomes and value. They really shouldn’t be caring about the amount of time it takes to create the inputs to create the outcome.”
Clients now want consultancies to help them build solutions, she said, not just advise them on what to do. In one recent project, Elixirr helped a global insurer build an AI-based motor insurance platform, Caerlewy-Smith said.
Another advantage smaller consultancies may have is the speed of adopting AI internally. Elixirr took six months to get its data into a format that could be fully used by its AI models,…
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