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By 2025, a two-person AI-powered consultancy could outbid McKinsey for a Fortune 500 contract. Sounds far-fetched? Think again.

It was a sunny day in Madrid. The South Summit 2024 was in full swing, and I had a clear goal - pick the brains of fellow speakers about AI's impact on consulting.

I'd just wrapped my last meeting of the day. Sweat-soaked and brain-fried, I caught a phrase that cut through the haze:

"80% of consulting will vanish because of AI."

Bullshit, I thought. Then I paused.

What if it's true? Maybe instead of killing, it would do the opposite - democratize it?

Let’s find the data-driven answers - based on conversation with 384 people! 👇️ 

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🧠 The Great “Intelligence Democratization”

Buckle up. I'm about to take you on a data-driven journey with insights gathered from interviews conducted with consultants worldwide.

• In-person interviews: with 32 subject matter experts at South Summit 2024.

• AI-Assisted Interviews: with 145 consultants on their “AI predictions for consulting industry” (June-August, 2024).

• AI Maturity Index: Data coming from 206 AI-assisted interviews with consultants, benchmarked to 1,822 interviews with other knowledge workers (August-November 2024).

Today I publish part 1 of my research. If you want to get access to full table of contents (preview below), hit me up on LinkedIn.

The data reveals six fundamental shifts reshaping the consulting landscape, each powered by AI's democratizing force.

We're witnessing the dawn of a new era - move from „knowledge” to „allocation” economy in consulting. In this paradigm, success isn't just about knowledge, but how effectively you can leverage AI to apply that knowledge at scale. This isn't just disruption; it's democratization.

AI is enabling smaller firms and independent consultants to compete more effectively - our AI Maturity Index is showing first signs of this.

• Believed by approximately 40% of consultants, who see AI tools as enabling them to perform tasks previously requiring larger teams.

• Noted by around 45% of interviewed, highlighting access to advanced AI allows offering sophisticated services like data analytics and predictive modeling.

In the new "allocation economy" of consulting, the rules of engagement are being rewritten. AI is not just leveling the playing field; it's tilting it in favor of agile, innovative smaller firms.

Here are the Six Key Market Shifts that are coming:

1. SMB Market Explosion: As small and medium businesses (SMBs) rush to automate with AI, they're turning to consultants who understand their unique needs. Smaller consulting firms, often more attuned to SMB challenges, are perfectly positioned to capture this burgeoning market.

2. Productization of Services and Price Reduction: AI enables consultants to standardize and scale their offerings, reducing costs. High-quality consulting becomes accessible to a wider range of clients, allowing smaller firms to compete on price without sacrificing quality.

3. Scalable Expertise: AI allows small firms to punch above their weight. A two-person team armed with the right AI tools can now compete for contracts that previously required armies of analysts.

4. Democratized Data Insights: AI enables boutique firms to harness data-driven insights once exclusive to large consultancies. Small teams can now offer Fortune 500-level analytics to businesses of all sizes.

5. Niche Domination: AI facilitates the rise of ultra-specialized micro-consultancies. These firms can leverage AI to become unrivaled experts in niche industries or specific problem areas, outperforming generalist giants.

6. Reduction in Need for Junior Staff: With AI automating routine tasks, there's less need for large teams of junior consultants. This levels the playing field for smaller firms that couldn't previously afford extensive staffing.

To understand the real impact of these shifts, let's erexamine the current state of AI adoption in consulting - backed by fresh data from the AIMI.

🌍 The Current Status of AI in Consulting

To understand how AI is reshaping consulting, we turn to fresh insights from the AI Maturity Index (AIMI), which assesses AI readiness among knowledge workers through personalized AI-assisted conversations.

1. The Experience Paradox

Despite consultants having the highest average experience (17 years) and being among the older professionals (avg. age 48), they're not leading in AI maturity. This suggests that experience, while valuable, isn't automatically translating into AI leadership.

AIMI Scores by Dimension

Skills and Attributes

2. High Frequency of AI Usage Among Consultants

Surprisingly, 48% of consultants use AI tools at least once a day, with 38% using them multiple times daily.

While almost half consultants use AI daily, this actually places them third in adoption rates behind:

• Marketing & Communications (50% daily usage, with a higher usage score of 78.82)

• Engineering & Development (56% daily usage, with a usage score of 71.10)

Interestingly, consultants with over 20 years of experience are 25% more likely to use AI tools multiple times a day than their younger counterparts, challenging the stereotype that tech adoption is a young person's game.

3. AI's Psychological Impact on Consultants

Consultants who frequently use AI report a 30% reduction in workload stress.

Other benefits include:

• 45% report better work-life balance.

• 38% feel more confident in their deliverables.

However, the psychological impact score for consultants is 59/100, placing them fourth among other professions, indicating room for improvement.

4. The Innovation Gap

Consultants rank 3rd in innovation scores (40/100).

This innovation gap is particularly revealing when we look at the usage patterns:

• 75% of consultants use AI for brainstorming

• But only 31% leverage it for project planning

• And just 35% for product design and innovation

The disconnect between high usage intent (75% for brainstorming) and relatively low innovation outcomes (41) points to a critical insight: consultants are using AI more as a ideation tool rather than an end-to-end innovation partner.

This suggests three key opportunities:

1. Integration: Moving from isolated AI use to integrated innovation workflows.

2. Implementation: Bridging the gap between ideation and execution.

3. Innovation Process: Developing AI-enhanced methodologies for the entire innovation cycle.

5. Productivity Gap

Consultants reported 12.9 hours average weekly hours saved thanks to AI.

However, only 60% express confidence in the time saved, indicating that a lack of skills or understanding may hinder others from reaping full benefits.

6. Female Consultants Excel in Creative AI Use

Female consultants are 30% more likely to use AI for idea generation and creative tasks

Female consultants are showing particular strength in creative AI applications:

• 30% more likely to use AI for idea generation and creative tasks

• Higher rates of AI integration in client-facing deliverables

• More innovative approaches to AI-powered problem-solving

7. The Decision-Making Dilemma

Only 45% of consultants use AI for predictive analysis, risk assessment, scenario planning, and gathering insights.

While consultants have a 2nd place in decision-making scores (25/100), this position masks a crucial challenge: even the best performers are only utilizing about a quarter of AI's potential in decision support.

8. The Experience Advantage

Consultants with 20+ years of experience are 25% more likely to use AI multiple times daily.

This counterintuitive finding - that senior consultants are leading AI adoption - suggests the technology is being embraced as a strategic differentiator rather than just a productivity tool. However, the gap between senior and junior adoption rates points to potential knowledge transfer issues within firms.

🦾 Which consulting tasks will be disrupted by AI

LLM’s are becoming increasingly good in keeping larger context - number of tokens they can have in their memory for a single conversation. Just to show you the growth we went through: GPT-3.5 - 16,385 tokens, vs GPT-4 up to 128,000 while Sonnet 3.5 is 200,000 tokens. And it will only continue to grow. This gives a huge opportunity to upload various documents into LLM to give full context on the decision you want to make.

A lot of unknowns - how to measure the impact of AI on your work? One of the frameworks that could help is called STEP Framework (Segmentation,Transition,Education,Performance) to understand where you should focus as a human, and where you can hire AI to co(-create).

Group 1: Tasks that AI can’t or shouldn’t do

Despite AI's capabilities, some aspects of consulting remain firmly in the human domain. Creative problem-solving, emotional intelligence in client relationships, and nuanced strategic thinking are areas where human consultants continue to shine.

Group 2: Tasks for which AI can augment workers’ action

Support human efforts by providing insights or automating sub-tasks. AI Assistants are supercharging human capabilities. They're helping consultants work smarter and faster, from enhancing research capabilities to providing real-time data analysis during client meetings.

Group 3: Tasks that can be automated by AI.

Guided AI Agents are taking on entire workflows autonomously. These agents can handle everything from initial client outreach to generating preliminary reports, freeing consultants to focus on high-value strategic thinking.

Especially the third group is worth analyzing, as. AI Agents are still far from mass adoption. Presently, an AI agent will use an LLM to generate a to-do list of tasks, and integrations with existing software to execute those tasks. But, that to-do list, if created by a more generalized LLM, may not be ideal for your industry or need.

A generalized AI Agent might understand the broad strokes of your field. But it may not realize exactly what kind of writing tone or industry nuances are needed for a specific client.

With AI being capable of both knowledge AND action, the game changer is on the horizon. **The coupling of knowledge + action is a critical moment for this field, because AI stops being a tool and starts being a collaborator.

But… it’s already really good at gathering data on analyzing it on autopilot. This is exactly how we used it for AI Maturity Index for Teams. 👇️ 

Preview of an AI generated AIMI Team Report.

Check out the full demo 👇 → AI Maturity Index Report

Ok, let's dive deeper into how these AI-enhanced tasks are reshaping each stage of the consulting process, opening new doors for agile, innovative firms ready to embrace the future:

While task disruption is significant, the real revolution lies in how AI is transforming entire consulting business models.

Forget hourly rates and project fees.

Welcome to the brave new world of AI-enabled consulting services.

But… that’s all for today. In next editions I will cover:

• 🦸‍♀️ Where AI is Impacting Consulting Work

• ⚠️ Top Barriers and Challenges in AI Adoption

• 💰 New Consulting Business Models Enabled by AI

• 🔮 How AI will impact consulting in the next 5 years?

• 🤖 The Future is Now: Are You Ready to Evolve?

Have a great weekend,

Iwo