October 10th, 2025
Why Consulting Firms Are Up for Disruption by AI
At a Glance
Let's be honest. The consulting industry, dominated by the familiar trio of McKinsey, BCG, and Bain, has shaped global business for decades. Their frameworks became gospel, their alumni filled the C-suites. But that legacy is now a liability. The very "innovator's dilemma" they diagnosed in countless slide decks is now staring back at them from the mirror. They must adapt or be displaced.
Yet these titans face the classic innovator's dilemma they've counselled countless clients through: adapt or be displaced. The industry's time-and-materials model, crafted for a world of information scarcity, is colliding with AI. But this isn't just about replacing human analysis with faster, cheaper software. It's about unlocking a fundamentally new way of devising strategy—one that is continuous, granular, and scalable in ways a team of human consultants could never achieve.
Make no mistake—consulting firms employ brilliant minds with deep domain expertise. Their institutional knowledge and battle-tested frameworks have genuine value. But their business model, pricing structure, and delivery approach were designed for a pre-digital world. We believe AI will democratizes access to insights and analysis, and new, AI-native firms will disrupt the status quo.
The Foundation:
How Consulting Became Essential
McKinsey & Company was founded in 1926, followed by BCG in 1963 and Bain in 1973. These firms didn’t just create consulting—they invented the intellectual scaffolding of modern business strategy.
BCG’s growth-share matrix and experience curve redefined how companies thought about portfolio management and competitive advantage. McKinsey’s MECE principle (Mutually Exclusive, Collectively Exhaustive) and pyramid principle became the gold standard for strategic thinking & executive communication. Bain’s RAPID decision-making framework streamlined corporate governance.
These weren’t just consulting deliverables—they were mental models that reshaped how businesses operate. The firms transformed strategy from intuition-based decision-making into a teachable, repeatable discipline. In a world before the internet, these firms possessed a superpower: information. Their entire model was built on information arbitrage—observing an innovation in one company, sanitizing it into a “best practice,” and selling that insight to ten others. Their value wasn’t just analysis; it was exclusive access to cross-industry knowledge that no single company could obtain on its own.
The Consulting Value Proposition:
Seven Core Services
So what are companies really paying for when they hire a top-tier firm? It boils down to a handful of core services (and no, this list isn’t MECE):
Knowledge Transfer: Consultants serve as information brokers, observing innovative practices at one client and adapting them for another. Their multi-client exposure provides unique visibility into industry trends and emerging best practices.
Benchmarking: Access to multiple competitors’ data (sanitized and aggregated) allows consultants to provide performance benchmarks impossible to obtain otherwise. Revenue per employee, operational efficiency metrics, and cost structures become competitive intelligence.
Expert Research and Analysis: Consultants excel at rapid knowledge acquisition. Junior associates dive deep into unfamiliar industries, leveraging expert networks like GLG to synthesize insights from industry veterans, academic researchers, and domain specialists.
Flexible Capacity: Consulting provides skilled labour without the overhead of permanent hiring. Firms can scale analytical capacity up or down based on project needs, while maintaining favourable revenue-per-employee metrics.
Blame Absorption: An industry truism: successful strategies elevate the executives who commissioned them; failed strategies become the consultants’ fault. This risk transfer mechanism provides political cover for bold strategic moves.
Change Management Execution: Consultants do the difficult work of organizational transformation—restructuring operations, managing layoffs, and absorbing the inevitable resistance that accompanies change.
Independent Advice: Consultants can offer advice that is contrarian to the consensus. When facing internal resistance, an authoritative report from a top-tier firm can unify stakeholders.
The Economics:
How Consulting Works
The traditional model runs on straightforward economics: role-based hourly rates multiplied by engagement duration. The 3 firms often compete at the same price point for engagements – Senior Consultants (those with 3+ years of experience) can cost more than $50,000 per week of their work in base rate. On top come fees related to offshore slide production, travel expenses & partner margins.
All-in, a single consultant can cost your business $100,000 a week. Let that sink in. For the cost of a two-month engagement, you could hire a world-class in-house AI engineering team for a full year. This isn’t a partnership model; it’s a wealth transfer mechanism, where the incentive is to stay longer and bill more, not to solve the problem efficiently and leave.
The model prioritizes billable hours over outcomes, creating perverse incentives that drive project scope expansion and duration inflation. Success fees exist but remain rare—revenue predictability trumps performance-based compensation.
Structural Problems:
Why the Model is Breaking
While the model made sense when it was created almost 100 years ago, the cracks are all but apparent now. There are several problems generated by the business model.
Client Facing Cracks
Misaligned Incentives: Consultants profit from longer, larger engagements regardless of value delivered. Billing targets create pressure to expand scope and extend timelines, even when concise solutions exist. This shatters the myth of independent advice. A partner’s primary incentive is to secure the next multi-million-dollar engagement, not to deliver a hard truth that might upset the client sponsor. True independence is impossible when your business model depends on perpetual client appeasement.
Implementation Gaps: High-priced consultants rarely stay to execute recommendations. Strategic insights without execution support leave clients struggling with implementation.
Unclear Value: Even more rare is consultants staying in long enough to be able to say whether their recommendation brought the promised value and be held accountable for their own advice.
Internal Rot
Geographic Concentration: Premium consulting remains concentrated in wealthy regions. Companies outside North America, Western Europe, and select Asian markets remain underserved, limiting global knowledge transfer.
Slideware Inflation: The 200-page deck has become an industry standard—proof of thoroughness rather than utility. Most content goes unread, yet production consumes massive resources.
Partner Politics: Multiple partners per engagement create internal alignment overhead. Teams burn cycles rewriting the same deck to please three different partners—a soul-crushing exercise in satisfying internal politics instead of solving the client’s actual problem. Why do we have multiple partners? Well, because their profit-sharing credits get a boost from multi-partner engagements that are supposed to support internal knowledge transfer and avoid kingdom building by partners.
Labor Arbitrage: Profit optimization drives offshore outsourcing of skilled work. Slides created in low-cost locations get billed at premium rates, transferring value from clients to partner compensation.
The AI Disruption:
How Technology Changes Everything
Generative AI has unlocked two capabilities that undermine consulting’s core value proposition:
Deep Research at Scale: Tools like Perplexity, Claude, and Google’s research capabilities deliver comprehensive, cited analysis in minutes. Anyone can get a comprehensive 50-page report on the state of copper mining in Africa within 15 minutes using one of these tools.
Chain-of-Thought Strategic Planning: Modern LLMs can decompose complex problems into actionable steps, creating implementation roadmaps that previously required senior consultant expertise.
This directly threatens four of consulting’s core services:
Knowledge Transfer: Information flows freely through digital channels
Benchmarking: Public and private data sources provide competitive intelligence
Expert Research: AI can synthesize expert knowledge faster than human researchers
Flexible Labor: AI agents provide analytical capacity without human overhead
Independent Advice: Arguably AI can give you more independent advice compared to a Managing Director, whose bonus depends on 1 big account
Two services remain defensible: Blame Absorption and Change Management. But even these face pressure as AI agents with executive oversight begin supplementing human-led transformation efforts.
To be clear, the consulting titans are not standing still. They recognize the seismic shift and are making substantial investments to adapt their models. McKinsey, for instance, has deployed a proprietary generative AI platform called Lilli across its entire workforce to augment research and analysis. Lilli is trained on the firm’s vast internal knowledge base of over 100,000 documents and transcripts, aiming to deliver “McKinsey-esque” insights. Similarly, BCG is developing specialized GenAI tools for various industries and has launched BCG X, a dedicated unit for building new AI-powered ventures made up of BCG Gamma (data scientists), BCG Platinion (IT system architects) & BCG Digital Ventures (builders of innovative tools). Bain & Company has formed a high-profile alliance with OpenAI to co-create AI solutions for clients. However, these are fundamentally defensive moves—retrofitting a legacy model with new technology (quite similar to what Apple is trying to do after it failed to develop its own AI prowess). They are attempts to enhance an existing structure built on labor arbitrage and billable hours, rather than reimagining the core value proposition from the ground up.
Beyond Disruption:
A New Paradigm for Strategy
The offensive argument for AI in consulting is not that it makes the old model cheaper, but that it makes a new, superior model possible. For the first time, the analytical rigor that was once the exclusive domain of a few elite consultants on a three-month engagement can be scaled infinitely and run continuously.
This enables a shift from episodic projects to a continuous strategy engine. Instead of receiving a static 200-page deck that is obsolete the moment it’s printed, your business can have a live system that constantly analyzes market signals, customer data, and internal operations.
This unlocks granular, real-time decision-making. Imagine moving beyond a quarterly review of your brand positioning. With an AI agent, you could analyze daily social media sentiment, competitor ad spending, and sales data to adjust marketing campaigns on the fly. You can have a strategic partner that is always on, constantly testing hypotheses and refining its recommendations at a speed and granularity that was previously unimaginable. This is the true promise of an AI-native advisory model.
Market Signals:
The Disruption is Already Here
The data tells a clear story. McKinsey, Bain, and BCG have tightened hiring and promotion rates, with some firms conducting significant layoffs despite record revenues. The industry is experiencing simultaneous growth and consolidation—a classic sign of technological disruption.
Client Behaviour is Shifting:
Fortune 500 companies increasingly build internal AI and analytics capabilities, reducing external consulting dependency. Follow the smart money. Private equity firms—arguably the most results-obsessed clients on the planet—are quietly changing the game. They’ve realized it’s cheaper and more effective to hire ex-MBB talent directly onto their payroll than to keep paying for the same advice wrapped in a different deck. They are insourcing the talent and cutting out the middleman. It’s one of the clearest signals that the old model’s value is eroding.
Cultural Indicators:
The power dynamic has reversed. In the 1980s, a McKinsey interview was a prestigious honour for entrepreneurs. Today, if Steve Jobs were interviewed by McKinsey, it would be seen as an honour bestowed upon the consultant.
The AI-Native Alternative:
A Different Model
AI-native consulting firms operate on fundamentally different principles:
AI Leadership: Founded by engineers and AI specialists, not traditional consultants from previous decades
Aligned Incentives: Value-based compensation tied to measurable outcomes, not billable hours
Continuous Deployment, Not Episodic Reports: We provide live, AI-powered insights 24/7, replacing the static, episodic PowerPoint.
AI-first Staffing: AI agents with human oversight, not overstaffed teams
Accountability: Responsibility extends through implementation, not just recommendation. If you are not making money, we don’t get paid.
The question facing executives is straightforward: Do you want strategic advice from partners who struggle with PDF conversion, or from teams that build, deploy, and optimize AI systems?
The Advisory Paradox:
Who Should Guide AI Transformation?
AI is transforming the consulting industry, disrupting the traditional labour-led business model. As one industry observer noted, firms increasingly need guidance on AI implementation and integration.
But this creates a fundamental paradox: Who should provide AI strategy? Let’s use a different example – who do you trust to build your house? An eloquent real estate agent who can describe every architectural style, or the architect and construction crew who have actually built a hundred homes? The choice for AI strategy is just as stark: partners who can recite buzzwords about “real-time, AI, Cloud-based” gizmos but have never heard of gradient descent, or practitioners who actually design, build, and deploy AI systems every single day?
The answer seems obvious, yet traditional consulting firms are positioning themselves as AI guides. This represents either remarkable strategic agility or profound market misreading.
Operand:
Built for Tomorrow’s Challenges
This is where Operand enters the conversation. We’re not retrofitting legacy models with AI features—we’re building from first principles for the AI-native era.
We don’t sell time; we deliver measurable outcomes.
We don’t create presentation materials and disappear; Our deliverable isn’t the 200-page deck we condemned earlier—a document destined to gather dust on a server. We don’t create presentation materials and disappear. Our deliverable is a working AI system, integrated with your team, that starts generating measurable value from day one. We hand you a capability, not a binder.
We deploy functional systems that generate tangible value. For example, our AI-driven approach generated a revenue uplift of over 7% for one of our retail clients. For another, we engineered a promotion that produced a 350% increase in sustainable revenue.
We don’t avoid implementation accountability; we own transformation results.
Our approach combines the strategic thinking that made consulting valuable with the technological capabilities that make it scalable. We bring together domain expertise, technical execution, and continuous optimization in a single engagement model. Importantly, we are keeping humans (incl. experienced ex-consultants) in the loop, so our clients can have peace of mind that the recommendations we generate are not just LLM hallucinating.
The Choice:
Legacy or Future
The consulting industry’s transformation mirrors every other sector’s encounter with digital disruption. Incumbents possess deep expertise and established relationships. But their business models, pricing structures, and delivery mechanisms were designed for a different era.
We’re seeing a real shift in consulting, thanks to AI. This isn’t just about being more efficient; it’s about thinking and solving problems in new ways.
So the choice in front of you isn’t just about picking a vendor. It’s a choice between a one-time snapshot and a continuous motion picture of your business. It’s a choice between a consulting model that documents problems in a static report, and one that builds a dynamic engine to solve them continuously. Do you want to buy another exquisitely formatted PowerPoint deck, or do you want to invest in a functional system that improves your bottom line? Do you want to partner with firms that talk about AI, or with a team that actually builds it?
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