The management consulting industry, valued at $1 trillion, faces its own Kodak moment—the kind of technological disruption that precipitated the photography giant's 2012 bankruptcy. Firms like Accenture ($155 billion) have thrived by offering IT, cybersecurity, and offshore call-center services at rates below companies' internal costs. Artificial intelligence is upending this economic dynamic.
The current situation is proving particularly difficult for consultants. The pandemic, inflation, and economic uncertainty have pushed their large clients to cut spending drastically. The US government, one of the biggest clients, is cancelling multi-billion-dollar contracts. In March 2025, the Department of Government Efficiency targeted ten major firms—Deloitte, Accenture, Booz Allen Hamilton, IBM, Guidehouse—to justify their fees. As a result, shares of sector leaders have fallen by as much as 30% over two years, while the S&P 500 climbed 50%.
Paradoxically, AI offers immediate advantages to consultants. In September 2025, Accenture announced it had cut 11,000 positions through automation, with further layoffs planned for staff who cannot be retrained. Salesforce eliminated 4,000 customer support employees. Microsoft froze hiring in its consulting division.
Unfortunately for the industry, large clients are discovering these same advantages. A British chief financial officer illustrates the problem: a project costing $1 million in-house could be outsourced to Accenture for $200,000. With machine learning, companies are now accomplishing the same work for just $10,000. This cost reduction gives clients considerable leverage: if consultants refuse to align their prices, the client will find a cheaper competitor or simply bring the task in-house.
Facing this precipice, firms are weighing several strategies. They could acquire specialized AI players like EXL ($6 billion), which helps the financial and healthcare sectors with their AI transformations, thereby accelerating project execution. Alternatively, mergers between major firms appear possible.
These options, however, have limits. Merger synergies would be minimal since firms generate revenue by deploying their top talent on major projects—consolidation would risk a massive exodus of talent.
None of these strategies will stop clients from demanding drastically reduced prices. Kodak survived its 2012 bankruptcy, re-emerging as a diminished company valued at $500 million—far from the $30 billion of its 1990s peak. Consultants risk a similar devaluation of their industry.
On September 25, 2025, Accenture unveiled an $865 million restructuring over six months to realign its workforce toward growing demand for digital and AI services—a sign that adaptation is already underway, but under extreme pressure.