Consulting firms face growing pressure as clients increasingly leverage artificial intelligence (AI) to reduce spending on external advisers for large IT projects. Across industries and regions, companies are demanding lower fees or shifting work in-house, supported by AI tools that simplify integration and reduce the need for extensive consulting services.
Leading consulting firms—including the Big Four (Deloitte, EY, KPMG, PwC), Accenture, and Capgemini—have historically deployed large teams to help clients implement and integrate new IT systems with legacy infrastructure. However, this model is evolving as clients adopt AI-enabled approaches to streamline processes. Jochen Kamp, overseeing a major IT transformation at German pharmaceutical company Bayer, noted that traditional consulting roles are changing, with fewer consultants required and new skill sets emerging. Bayer is employing around 30 AI agents to assist in coding and testing as part of a six-year SAP system overhaul, aiming to reduce reliance on external consulting staff during deployment.
Market research firm Source Global estimates that global spending on technology consulting will reach approximately $420 billion in 2024, an 8% increase over 2023. Within this, $140 billion is dedicated to advising on emerging technologies such as AI, while implementation work—a long-standing core of consulting business—accounts for roughly $236 billion. Despite revenue growth, investor confidence in consulting firms has waned amid concerns over delayed IT projects and evolving client needs. Capgemini’s shares have declined roughly 31% this year, and Accenture’s stock has dropped 27%, with a notable slump following warnings about postponed client initiatives.
SAP, whose software underpins many large IT transformations, projects AI-driven enhancements to its systems could reduce external consulting costs by up to 50%. Dominik Assam, SAP’s chief financial officer, described AI as poised to "massively displace" parts of the consulting market by enabling faster work requiring fewer billable hours or potentially eliminating the need for some advisers altogether. However, Capgemini chief executive Aiman Ezzat characterized such cost-saving estimates as ambitious, expressing skepticism about a 50% reduction but acknowledging ongoing productivity improvements and business industrialization within the consulting sector.
Clients report increased bargaining power in negotiations with consulting firms. Greg Meyers, chief digital and technology officer at Bristol Myers Squibb, said the company has pressured external advisers to lower costs or adopt fixed-price and performance-based contracts, rather than traditional hourly billing. He also highlighted the impact of AI in reducing cybersecurity-related consultancy expenses by automating monitoring functions.
Financial institutions are likewise investing heavily in AI to modernize operations and cut costs. Commerzbank plans to invest €600 million in AI technologies by 2030, targeting annual savings of €500 million, partly through reduced consulting expenditures. According to Commerzbank’s head of AI, Oliver Dörler, AI tools now expedite tasks such as analyzing source code and IT dependencies, reducing the months-long workload previously handled by external vendors.
Despite these shifts, consulting firms retain significant roles, particularly in areas requiring specialized industry knowledge or extensive transformation management. Ezzat noted that firms have adapted repeatedly to technological and market changes over decades, including through offshoring and enhanced productivity, and that they continue to provide value in sectors like aerospace and automotive engineering where AI adoption is more limited.
Client satisfaction with large consulting providers remains mixed. Source Global’s survey indicates only about one-third of IT transformation projects supervised by external consultants are considered wholly successful, with specialist IT consultants like Accenture generally rated higher than the broader Big Four. Some companies report greater efficiency in working directly with technology partners and deploying AI tools internally, reducing reliance on traditional consultants for certain projects.
Meanwhile, some large corporations continue to depend on consulting services for major restructuring programs. British American Tobacco emphasized the growing importance of consultants during its multi-year cost-cutting initiative focused on AI deployment, involving significant workforce reduction and outsourcing. Volkswagen recently engaged Boston Consulting Group and McKinsey to support decisions related to substantial job cuts and plant closures.
Overall, while AI is reshaping the consulting landscape by enabling clients to reduce external advisory expenditures and undertake more in-house work, consulting firms are adapting by evolving their service offerings and focusing on areas where human expertise remains essential. The full impact of AI on the industry’s revenue and structure is still unfolding, with both opportunities and challenges ahead for consulting providers.