Consulting firms rarely make headlines about AI. But when they do, it tends to be either about multibillion-dollar investments or a high-profile mishap linked to their use of AI. But looking at it as a whole, it is clear that the consulting industry’s approach to AI has plenty of cracks.
It is not a collapse, nor a downfall. It feels more like a pressure test. For three decades, the Big Four sat at the centre of every major transformation. Deloitte, PwC, EY and KPMG, along with Accenture, McKinsey or BCG, built vast engines that combined audit weight, global processes and armies of analysts. For years, that model felt unshakable.
Nishant Pahwa, connection and network manager at Cresent Core Consulting, with prior experience at EY and PwC, offered a telling example. He recalled that in early 2025, two CXOs walked out of a boardroom when someone remarked, “Deloitte gave a great deck… but I need someone who can solve this by next Friday, not next quarter.”
That sentiment is now widespread. Many companies would rather turn to smaller firms that adopt and deploy AI far more quickly, rather than spending thousands of dollars on big firms and waiting for quarterly results. IBM’s consulting head, Mohamad Ali, recently told The Times of India in an interview that consulting firms’ model is under threat.
“The future of consulting is going to be a hybrid of people plus software,” he said, adding that the companies that do not adopt this would fail.
The firms are not shrinking. Their numbers still climb. Deloitte stands at more than $70 billion in FY25, PwC at $57 billion, EY at $53 billion and KPMG at around $38 billion. But the market around them is changing faster than they can turn.
But, What is Actually Happening?
Clients want less analysis and more execution, less manpower and more speed. AI has pushed this shift forward at a pace that has surprised even insiders. Business Insider recently highlighted how smaller firms, which are basically consulting startups using AI, have become the biggest competition to the Big Four consulting firms.
Every large firm has pushed aggressively on AI. Deloitte built the Deloitte AI Institute, PwC announced a billion-dollar commitment, EY launched EY.ai, and KPMG tied up with Microsoft and AWS for large AI programs.
Accenture is a particularly interesting example. After spending more than $3 billion on AI, the firm described the returns as underwhelming. The company is now also rebranding its 8,00,000 workforce as ‘reinventors’ to adapt with AI and has announced a partnership with OpenAI to integrate ChatGPT Enterprise to all its employees.
In many ways, this mirrors the forward-deployed engineer model that Palantir has followed for a long time. These are essentially technology consultants who will advise companies while sitting within them, hinting strongly about where the industry is heading.
While the large firms continue to handle the multi-year projects, a different race is unfolding in the shorter cycles.
Boutique firms like Xavier AI, NextStrat, Consulting IQ, Perceptis, and a few others have stepped into high-speed, high-depth mandates. These firms win because a team of 12 specialists outpaces a team of 200 generalists inside a Big Four engine.
Ironically, these firms are built by several former McKinsey consultants. Meanwhile, McKinsey itself recently cut around 200 jobs to focus more on AI-related roles. This is also what went down with Accenture, which announced a slew of layoffs in its latest quarterly report.
Yet, the challenge is that the struggle continues. In Canada, The Independent found that a Deloitte report for Newfoundland and Labrador contained citations that did not exist or did not support the claims made. The report cost around $1.6 million Canadian.
This followed its first failure in Australia, where Deloitte refunded part of a A$459,000 contract because the report had fabricated references created by an Azure OpenAI system using GPT-4o. Australian senator Deborah O’Neill said, “Deloitte has a human intelligence problem.” She said government agencies might be “better off signing up for a ChatGPT subscription”.
Deloitte said the errors did not change the findings. But the episode shook trust across the sector.
The AI Hard Sell
This is what makes the current friction so interesting. The consulting world is selling AI harder than ever, and failing to do so.
KPMG went from zero to $650 million in revenue from generative AI in one year. Deloitte launched its $3 billion Zora AI with NVIDIA, focused on autonomous AI systems. BCG now earns about 20% of its revenue from AI projects. McKinsey offers more than 140 AI accelerators. The story they present to clients is clear. But clients are starting to notice something different.
Many of the tools these firms sell are now directly accessible to companies through OpenAI, Anthropic or even Google and Microsoft. They sit on cloud platforms and behind APIs. They come from the same model providers everyone uses, alongside forward-deployed engineers.
There is also a deeper problem. Enterprises are not ready for AI at the scale consultants promise. Mukesh Bansal, founder of Nurix AI, earlier said, “Everyone is building AI agents, and yet so few AI agents are in production doing real work.”
He said agentic AI companies need to operate like a mix of McKinsey and Infosys, pairing strategy with execution. Boutiques have stepped into this gap with AI native models. As Business Insider first reported, many of these firms are built by former MBB or Big Four consultants who wanted less bureaucracy and more speed.
They serve clients who could never have afforded a McKinsey team. Their growth is rapid. FT reported that Xavier AI says revenue is doubling month over month. Perceptis raised $3.6 million, SIB has identified more than $8 billion in savings, and Genpact cut $40 million in costs with AI through its Client Zero programme.
These firms show a version of consulting that feels more like a product—faster and easier to consume.
The consulting world is now a mix of giants, boutiques and AI native players. The cracks are not signs of collapse. They are signs of recalibration. The winners will be the ones who can combine real human judgment with AI in a way clients can trust. The old fortress is still massive, but the drawbridge is no longer one-way.
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