The days of the consulting generalist may be numbered

• Demand for strategy consultants, also known as generalists in the industry, is on the decline.
• Consulting analysts say the use of AI is driving a shift toward specialization and expertise.
• Generalists won’t disappear, but analysts say many could be displaced as firms focus on specialists.

Artificial intelligence is shining new light on the $400 billion world of strategy consulting, and it might be tarnishing the allure of high-paid business strategists.

That’s not the conclusion you might reach when listening to all of the consultancies that say they’re doubling down on AI, which they say will make their legion of consultants faster, better, and more effective. But behind the curtain, demand for management consultants — a small, but flashy segment in the broader consulting space — isn’t what it used to be. In the age of LLMs, the advice they offer is becoming less valuable, and the pressure has increased for consultants to develop more granular expertise and specialization.

The giants of the space have been vocal about their use of AI and have already shed scores of consultants who were hired during the pandemic.

But the disruption may be nowhere near over, with AI potentially displacing another 25% of management consultants as firms lean away from generalists and hold consultants more accountable for results, industry professionals told Business Insider.

The shift already appears to be underway. Management consultants — who provide business strategy help to different types of firms and are considered generalists in the industry — are looking at the toughest job market for their line of work since 2008, according to an analysis conducted for Business Insider by workplace intelligence firm Revelio Labs.

The broader job market for consultants appears to have stalled along with other industries, with low exit and entry rates, but demand for more specialized consultants is still high. Hiring for consultants with a niche focus in sustainability, defense, supply chains, and tech, for instance, is stronger than hiring for general management consultants, Revelio data shows.

Management Consulted, a firm that conducts industry research and offers career advice for consultants, estimates that the hiring of specialist consultants has likely increased 20% to 35% over the last three years.

Over the next five years, it estimates that specialist hiring could increase by as much as 60%, largely driven by demand for skills in AI, data, and expertise in other industries. Demand for broader strategy consultants could decline by another 10% over that timeframe, Namaan Main, Management Consulted’s chief operating officer, told Business Insider.

“Strategy consulting is not going away,” Mian said. “The hiring mix is just shifting,” Mian said.

James Ransome, the head of strategy and management consulting executive search at talent advisory firm Patrick Morgan, sees more volatility ahead. Over the next five years, he estimates that the split between generalists and specialists in consultancies could shift from 80-20 to 60-40, the equivalent of around a quarter of management consultants being displaced.

“It is AI changing the pyramid,” he told Business Insider. “They don’t just expect to see a few slides and a thumbs up anymore. They really want individuals that can add value and actually, ideally, would have industry experience as well.”

Cybersecurity consulting is expected to be the fastest-growing line of service in the US consulting space, expanding 14%, a February report from Source Global found. Consulting related to HR, change, and people strategy, by contrast, is expected to grow just 2% this year.

Some firms have made their focus on specialization public. In January, Business Insider exclusively reported that Deloitte was planning to overhaul its job titles across the US and replace them with more detailed titles that reflect a worker’s “job family,” or area of focus.

McKinsey, a titan of the management consulting space, said it was looking to hire more generalists, but was also increasingly focused on consultants’ ability to integrate multiple areas of expertise.

Yuval Atsmon, the firm’s CFO, said he considered many of the firm’s consultants to have one or multiple areas of expertise that would allow them to work in a specific industry, or within a specific function across multiple industries.

“We are definitely looking for talent with a higher level of tech quotient, AI quotient,” he said, adding that those two areas were a particular focus going forward.

Boston Consulting Group, another management consulting giant, told Business Insider it was hiring more specialists, with a focus in areas like AI, tech, supply chains, and marketing.

While the generalist track still exists and career progression at the firm is flexible, a consultant is now expected to develop an area of expertise sooner, such as after one or two promotion cycles, Brian Myerholtz, a senior partner at Boston Consulting Group who leads the firm’s North America recruitment, said.

“When I started at BCG, I think you could make it farther into your BCG tenure and still be a generalist,” Myerholtz said.

Bain, the third among the big three management consulting giants, didn’t respond to an interview request from Business Insider

Off the clock

The days of consultants billing hours for a slide deck might be in the rear-view.

Tom Rodenhauser, the managing partner of K2 Consulting Research, said the existence of AI has eroded some of the value of pure business strategy, which has long been the “bread and butter” of the three MBBs, he told BI.

AI has also rejigged consulting’s hourly billing model. As the technology has accelerated research and other processes, more firms are shifting to outcome-based pricing combined with fixed fees. The result is a renewed industry focus on implementation and value over mere activity.

“It kind of starts squeezing out the generalists,” Rodenhauser said. “You can’t have a bunch of generalists who, yeah, they’re great at client relations, but is that really what you want?”

“‘Strategy’ will be a given and the focus will be on outcomes,” he followed up in an email.

In November, McKinsey told Business Insider that around a quarter of its fees were generated from outcome-based pricing.

At Big Four accounting firm KPMG, billable hours are already out in “a really large portion” of the business, Rob Fisher, vice chair of advisory at KPMG US, said. The old model “is not an accurate representation of the costs that we have in the engagement or the value that we’re delivering.”

Even though prices aren’t necessarily coming down, the shift appeals to clients, Fisher added.

“They really like the idea of, ‘Hey, it’s a fixed fee,’ or, ‘Hey, you can tie it to this outcome,’ instead of the potential for fees to keep rising if teams take longer than expected.

Management Consulted’s Mian said more firms were emphasizing revenue-per-employee as a performance metric, citing his conversations with those in the industry.

“I think there is a very strong conversation in the room about focus on impact, not just insight, and that is a part of our evaluation criteria,” BCG’s Myerholtz said. “I would say that’s always been part of the conversation, but it probably is more a part of the conversation today than it used to be.”

Specialization is now what makes a consultant stand out, Ransome said. His firm, which works with consultancies, has seen the number of clients who have stated a preference for candidates with prior experience in a specific industry over candidates from a pure consulting background triple over the last two years.

Rodenhauser said he believed demand for technical consultants would likely outpace demand for general management consultants for the next several years. In consulting’s new era, he sees a partner is more likely to be seen as a “domain expert” in whatever niche they’re in.

He added that he believed the industry was going through somewhat of an existential crisis as firms redefine what it means to be a consultant.

“They won’t admit it publicly, but I think privately they know that the industry is irrevocably changing,” he said of the industry’s big players. “Because if you really play this out, the way it should work is, a lot of these firms should shrink.”