Over the past few weeks, I have seen a fair few videos popping up on my EWCHOOB feed about the collapse of corporate and management consulting jobs. They are all much of a muchness – there does appear to be something of a script circulating around the creator community about the supposed downfall of the Big 3 and Big 4 consulting companies. You will see lots of videos around like these:

If you take the time to watch them, you will quickly realise that they all kind of say the same thing: that AI has “disaggregated” consulting and changed the business model, to the point where strategy and management consulting companies no longer deliver anything like the value that their fees would indicate, and that those same big consultancies are now reaping what they have sown through terrible advice and extraordinary corruption over the past several decades.

This is an easy thesis to accept uncritically. It is also largely (though not entirely) wrong.

The consulting industry is rather opaque to anyone who has not actually been in it. People often ask what consultants do, and the answer, for most of them, is that consultants get paid obscene amounts of money to come up with pretty, useless, PowerPoint decks. (The placement of those commas is deliberate – remove them, and you get a very good idea of what I actually think of most consulting gigs.)

As stereotypes go, that one has a great deal of truth in it. But there is more to consulting than just this.

How do I know? Well, I am of the view that, on most subjects, one should only speak when one has the authority and knowledge to do so. On the subject of consulting, one can, and should criticise it when one has first-hand knowledge of the field.

In other words, you are best placed to criticise corporate management consulting when you are one – and I are one (so to speak).

I will only say further that I am not employed by the Big Three (McKinsey, Bain, or BCG), or by the Big Four (PwC, EY, Deloitte, or KPMG) in any capacity. I have interviewed at various stages in my life for all of the Big Three, and for two of the Big Four, but never made the final cut (and I thank God for that). However, I have sufficient knowledge of the field, across two continents, to speak with some authority on what management consulting is really like.

Let me start by pointing out where these videos get things right.

Abominable Imbecility has indeed substantially challenged the entire business model of management consultancies worldwide. Consulting, at its core, is nothing more than the business of renting out brains. That is literally all there is to it. How you use those brains, determines the success or failure of a consulting engagement. And make no mistake, most clients, and most consultancies, use those brains in ENTIRELY the wrong fashion.

Consulting engagements, especially for the strategy and market entry projects, always start with some kind of research. And that research used to be the work and purview of armies of junior analysts. It was not uncommon for McKinsey on one end, or PwC on the other, to throw lots of bodies at the problem. You would have junior analysts with zero to two years’ worth of work experience slaving away over research reports and pulling together data from all over the place, distilling it down to its core, before a manager or engagement lead distilled it down into a set of PPTX slides.

The advent of AI has made that army of analysts almost completely irrelevant.

I have seen this myself in our own business. We used to have several analysts in our team, but ever since we adopted AI wholesale, we have barely hired a single Analyst. Indeed, the entire industry needs to fundamentally rethink the role of an Analyst – we certainly do. This is critical to the survival of most consulting firms; if they cannot figure out how to map the route from Analyst to Partner, which no longer exists in its original form, then they will LOSE the global war for talent.

AI has definitely broken the business model of the biggest and most well-known consultancies. That model revolved around hiring an army of young sharp minds to come and work on-site, doing… stuff. No one could ever figure out what, exactly, but as long as they were producing lots of useless PPTXs that no one ever reads, those companies could justify their gigantic fees.

And they ARE gigantic. McKinsey likes to talk about the “$100,000 deck”, which requires a level of skill with slide-writing that you just do not get in industry in general. I know, because I have had to sit through far too many PowerPointless meetings in my life, where the slide creator had no idea how to use text and graphics to communicate anything. Those meetings are pure torture, and should be banned outright. Indeed, if corporate consulting teaches you one thing, it is how to use PowerPoint to communicate properly.

(This still does not change my opinion of the application. Indeed, if I had my way, I would ban PowerPoint entirely from corporate environments, on pain of public flogging, and force people to re-learn how to communicate using the written and spoken word, with simple charts and graphs on overheads for punctuation.)

It is not uncommon for consulting companies, especially the really big ones, to charge upwards of US$500K for a single engagement. And it is – or was – not uncommon for them to earn those fees by putting lots of “Senior Consultants” who are actually around the age of 25, with or without an MBA and maybe two years’ worth of actual work experience, into client sites.

That is the “butts on seats” model, and it is especially endemic among the Big 4. It no longer works.

The Age of Corona-chan showed us that most corporate jobs could be easily done at home with little to no loss of productivity – and significant gains, in many cases. The demand for corporate consultants to come onto client site and work there has correspondingly slackened significantly. I have seen this myself, where Partners from the older generation insist on their teams being present at client sites, and clients themselves saying, “Dafuq for? We ain’t payin’ those expenses!!!”.

And AI has fundamentally shifted the equation, so that the tasks once performed over days and weeks by Analysts and Consultants, can now be done in hours by Claude.

Hell, Claude can even generate the PowerPoint deck for you, in your own consultancy’s branding and fonts, if you give it the right prompts. I know. I’ve done it. The outputs are not perfect – they tend toward the superficial and overly simplistic – but they get you about 80% of the way there, and that is where a skilled and experienced consultant comes in to apply the polish and finishing touches.

So there is some truth to the idea that bullshit corporate consulting jobs are collapsing. We have seen this in the employment statistics.

McKinsey got rid of 10% of its global workforce just this year, and other consulting firms have been quietly cutting heads for many months.

I remember a few years ago when the Big 4 were offering some projects for free to their clients, just to keep their workforce busy and sharp. This worked about as well as you can imagine: a client who expects to get US$500K worth of value from a consulting team, knows damned well that a “free” team is not going to be the A-list of problem-solvers, and therefore will not value that project at all.

However, this does not mean that consulting, as a profession, has gone away. Far from it.

In fact, we are seeing a structural shift in the market. Clients now expect far greater value from the fees they pay – as they should. They do not want a bunch of scraggly pimply-faced youngsters, who have no idea what a hammer or a wrench is, coming in and telling them how to run their businesses – consultancies that approach clients with such pitches, consistently get laughed out of the boardrooms. Again, I know. I’ve seen it happen. Instead, clients want to see the more experienced types with lots of grey hair, or a lack of hair (or, in my specific case, both), who bring to bear literal DECADES of experience in solving some of the world’s hardest business problems.

They also want to see those same consultants doing rather more than just presenting useless PowerPoints. They want to see instead some “skin in the game”, where the consultant has to figure out how to take some pie-in-the-sky strategy, and make it work in real life.

This is where most of the big consulting companies fail, and badly. Their entire corporate design is around offering advice – without seeing whether that advice sticks and lands.

The typical pattern used to be that McKinsey would come in, propose a brand-spanking-new strategy to the CEO (or, more usually, simply waste 8 weeks “analysing” the CEO’s own brainwave and signing off on it with a “McKinsey” stamp of approval attached), and then waltz away, with teams and people being redeployed to new projects and new clients. Said CEO would then find an operational consulting team, like Accenture or TCS, to implement the idea – usually very badly and involving a lot of outsourcing.

This approach no longer works. The smaller and boutique consulting firms that now succeed, especially in mature markets that have a lot of experience using consultants, now have to put some of their fees at risk to achieve specific ends and targets, and they have to get involved in actually building the systems and processes that make the client successful.

McKinsey, BCG, and Bain, are all adapting to this new reality. McKinsey is now incorporating operational consulting into its strategy teams, while building out their own in-house LLMs. They know damned well that their internal design and structure, which used to work so well for so long, no longer applies.

But it takes a long time to change these behemoths, and they are seeing their lunches eaten by smaller consulting firms like Baringa in some markets.

There is another aspect of consulting that the videos above almost entirely miss, and that is the impact of private equity money.

Part of the reason why consulting has such a shitty reputation, is precisely because the incentive structures for many consulting firms is to get rich quickly. The pattern among consulting firms is pretty standard at this point: after they reach a certain size (somewhere between 50 and 100 people, generally speaking), they become takeover targets for other, bigger consultancies, or for PE firms interested in diversifying their services company portfolios.

When PE takes over a consulting firm, they always – WITHOUT EXCEPTION – want to generate as much fee value as possible. Consulting firms typically trade on a 2X multiple of revenues – because, let’s face facts, most consulting firms have no actual hard IP that they can sell under license, and no real sources of competitive advantage beyond the brains of their employees. Given the 3-year time window of most PE firms, they will want to jack up the sales of their consulting companies as much as possible, before flipping them.

This goes a long way toward explaining the shitty and shady practices of so many consulting firms. They play both sides of the fence, just like McKinsey has done for so many years – if you want a good breakdown of that particular story, read a book called When McKinsey Comes to Town.

But they are not the only ones; Booz Allen Hamilton used to be pretty nasty about that sort of thing, too, and as far as I am aware, continue to be so even after rebranding into “Strategy&”, or whatever they call themselves now. There is a very good book by Martin Kihn called House of Lies, which remains a classic in the field.

All of this brings us to a singularly uncomfortable question, which all consultants wrestle with at one point or another in their careers:

Do consultants ever actually add anything of value?

I will give the classic consulting answer:

It depends.

It really does. It depends on where you work, what projects you work on, and whether you learn any hard skills along the way.

If you work on procurement consulting, for instance, yes, you do generate real value, because your efforts to negotiate lower costs and streamline the procurement processes of a client organisation have a direct impact on the bottom line, which is immediately visible, and which drives shareholder value.

If you work on strategy consulting, you can genuinely create tremendous opportunities for firms by pointing out where they can enter a market and generate revenues, which will thereby create jobs and value.

You might end up on a project where you literally rebuild the entire compensation structure for the providers of a client’s services, that end up with them finally getting paid fairly for their services, using a model that you built yourself and which has never been seen before in the industry. Those are intellectually and morally rewarding projects that genuinely feel fantastic when you finish them.

But there ARE projects in a consultant’s life that come down to “find me X amount of savings in this business function or department”. That almost ALWAYS comes down to finding heads to cut.

I hate, loathe, and despise that part of the job. I have been on the receiving end of three layoffs – the last one nearly destroyed me, and it took me years to claw my way back to something resembling stability and success.

To my great good fortune, I have never (yet) had to carry out a project of that kind – though I came uncomfortably close once, in a project where we eventually pointed out to the client that if they adopted such and such innovations and recommendations, then they could release or avoid hiring N people. While that is nowhere near the same as saying to a client, “Bob in Accounting needs to go”, it weighed heavily on my conscience at the time, and still does.

(It gives me some comfort to note that the client actually expanded its workforce overall, after that particular project.)

There is also the question of whether consultants actually know how to do anything:

The stereotype of the know-nothing corporate consultant has a great deal of truth to it. And, in general, I agree that it applies to most consultants.

Again, I speak from long personal experience.

I started out my career in risk management consulting, many many moons ago. At that time, I was fresh out of my Master’s degree in HARD MAFFS, and I thought I knew how to price derivatives. I didn’t know shit, and that became apparent the moment I had to figure out how to price some Bermudan swaptions using FinCad in Excel. Hell, I didn’t know Excel as well as I thought.

That lack of knowledge became really apparent when I went to work for Big Bad Evil Globohomo Bank #1 after my first layoff. I knew nothing, Jon Snow, and that became obvious almost immediately during my time as a product controller.

But I learned – fast. I had to. Banking does that to you. Anyone who goes through a serious role in banking, very quickly learns how to master Excel. And anyone who has a serious degree in skull-sweat STEM subjects, like HARD MAFFS, has to know how to think through and structure a problem.

This is a very good training ground for anyone who wants to become a consultant eventually, which is why I think there is actual merit to starting out in consulting and learning just how little you actually know, before going into industry to get trained properly. Only then should a yung-in go back into consulting – after picking up 5-10 years of experience doing real things in the real world.

See, consulting is a very weird profession. You get to solve lots of interesting problems, but you also never really see the results of your work in the real world. You finish the gig, you deliver the final report, and you move on. That is the job. And it remains the job, even after all of the changes I have described above.

What about the issue of AI slop making its way into consulting projects and reports?

This is a real, serious, and potentially existential issue for a great many consulting companies. The scandals surrounding the Big 4 are genuine, and the anger created by their over-reliance on AI is justified, given the colossal fees they charge.

But that, on its own, does not mean that consulting can be replaced by AI. Many consulting firms are looking to figure out how to incorporate their use of AI into their fee structures – and quite a few are RAISING their fees, not reducing them, for precisely the reason I outlined above, because their teams are shifting rapidly toward more experienced, more skilled, and smaller in size. The quality control aspects of AI are real challenges for the industry to deal with, and they ARE being dealt with, as I can assure you from my own personal knowledge of the situation.

So, no, consulting is not dead, it is not collapsing, and it is not going away. There will always be a demand for smart people who know how to solve problems. The nature of that demand, and what clients want, is changing – and that is all to the good. It also means that consulting firms will have to adapt their business models to keep up.

This does not mean bullshit consulting is going away. The incentives will always be there for bad clients to hire bad consultants who give bad advice. This phenomenon gets far worse when money is plentiful thanks to overly low interest rates. That era of free money has definitively ended, and we are all facing a global economic catastrophe, thanks to Dementia Don and his insane wars, but that also generates a lot more opportunities for the consulting firms of the future.

The death of bullshit consulting jobs is overhyped. There IS truth to the idea, but consulting, as a profession, is here to stay. It is simply changing and shifting in terms of its composition, and in terms of the skills required to do it.