…Smart chatbots have exposed how shallow much of the industry has become.

 

By Matthew Lynn

The global consulting industry is facing its biggest challenge in decades as artificial intelligence begins to reshape the way companies access research, strategy and business advice.

The sharp decline in Accenture’s share price has intensified concerns that AI is not only changing the consulting business model but also forcing the industry to prove the value of services that have long commanded premium fees.

Accenture, one of the world’s largest consulting and professional services firms, recently saw its shares fall sharply after reporting weaker bookings and lowering its revenue growth outlook.

The company reported that new bookings declined by 3 per cent in the three months to the end of May, while full-year revenue growth expectations were reduced to below 4 per cent.

The market reaction was severe, with Accenture’s stock falling by about 24 per cent in one week and significantly declining since the start of the year.

The downturn has raised wider questions about the future of the consulting sector, which has traditionally benefited from periods of technological change and corporate transformation.

For decades, consulting firms have positioned themselves as essential partners for companies navigating disruption.

However, artificial intelligence is now challenging parts of that model by allowing businesses to complete tasks that previously required expensive external advisers.

AI platforms such as ChatGPT and Claude are increasingly being used for research, analysis, drafting reports and generating business insights — tasks that were often outsourced to consultants charging hundreds of dollars per hour.

The technology is faster, cheaper and, in many routine cases, increasingly competitive.

The irony is that the current AI boom should have created a major opportunity for consulting firms.

Businesses are investing heavily in new technology infrastructure, data centres and digital transformation projects. Companies are reassessing entire operating models and looking for guidance on how to adapt.

That environment should favour firms specialising in strategy and change management.

Instead, the industry is facing pressure because AI has exposed weaknesses in a large part of traditional consulting work.

AI Challenges the Value Proposition

The biggest threat may not be artificial intelligence itself, but what AI reveals about the nature of some consulting services.

Many routine consulting assignments involve producing presentations, market summaries, forecasts and strategic documents — work that AI systems can now generate quickly.

Critics argue that some consultancy projects have become expensive exercises in producing reports filled with corporate language rather than delivering unique insights or measurable business outcomes.

AI has made companies question whether they need to pay premium prices for work that can be replicated internally with modern tools.

The impact is already spreading across the sector.

Other major consulting and professional services firms have also begun reducing staff numbers and slowing recruitment as demand patterns change.

The industry is worth hundreds of billions of dollars globally and plays an important role in training graduates and supplying talent to the wider business economy.

Any prolonged slowdown could therefore affect employment, professional services exports and corporate investment decisions.

Not All Consulting Is at Risk

Despite the disruption, high-value consulting is unlikely to disappear.

Work requiring original thinking, deep industry expertise, complex implementation and strategic judgment will continue to attract demand.

The challenge is that firms must move away from routine advisory services and demonstrate clearer value.

The consulting industry built its reputation by helping companies manage uncertainty and transformation.

Now, it faces its own transformation.

The rise of AI has created a test for firms that have spent decades advising others on change: they must now prove they can adapt to it themselves.

The decline in Accenture’s market value may therefore represent more than a temporary slowdown.

It could mark the beginning of a broader restructuring of the global consulting industry.

Matthew Lynn writes for The Telegraph.