The Rising role of AI and its Future Impact on the Consulting Industry
By Harishraj Srinivasan
Ever since the pandemic took over our lives, uncertainty has been the word at the top of our heads. Unemployment is a very real thing, and with the rise of a technological world, there are jobs being replaced and being taken over by machines on a daily basis. The rise of tech has disrupted careers in many industries, and continues to be a lingering fear at the minds of young and old professionals.
The management consulting industry in the world is considered to be one of the largest, with an aggregate worth of around 60 billion USD. On the other hand, AI, or Artificial Intelligence, is considered to be the next industrial revolution, with its impact already disrupting a plethora of industries and putting a great number of jobs at risk.
What is AI? How is it relevant to consultancy?
In its essence, AI is merely a branch of science, based on Alan Turing’s fundamental question in his 1950 paper: ‘Can machines think?’. This question has led to an entire scientific explosion over the past few decades, and today is so deep-rooted and integrated into our lives, that we often fail to acknowledge how advanced of a society we live in. We wake up in the morning to an alarm we asked Siri to set, and have Alexa change the lighting patterns of our room depending on our mood. Our day progresses with self-driving cars to a plethora of robots like Hanson Robotics’ Sophia, IBM’s Watson and Google DeepMind’s AlphaGo beating human beings in competitions and games they created themselves.
In a nutshell, AI enables machines to think, and think better than human beings, even the ones who programme it and enable it to function. They’ve been mobilized to rationally come up with solutions to problems and reduce the mundane tasks in any project, at least at this stage of their development. Companies that specialize in AI are trying to create solutions that will make many parts of the consultancy process more efficient with better access to data and better information for decision thinking. Most decisions and solutions that are created are based on human consultants’ inputs, but over the past few years, technology has seeped into the industry. AI has enabled consultants to save a lot of time from doing grunt data harvesting, and instead focus more on creating business solutions.
This benefits clients too with reduction in costs and fees.
It’s been established above that Artificial Intelligence can only be a boon for the clients, but in this industry, there are 2 stakeholders, and thus we’ll spend more time looking into the diverse impact on the latter- the management consultancy companies.
How does AI affect management consultant companies?
Large management consultancies are based on a few USPs that have defined them and this industry, ever since the late 90’s when they truly started creating a mark by being the invisible advisor for almost all the Fortune 500 companies. It’s important to analyze how each USP is affected by the growth of AI.
The kind of people that are recruited into these management consultancies are known to be the top of the cream layer, with undergraduates and postgraduates coming in from the top B-schools around the world. The people in higher positions come from a background in business experience and thus, the quality and diversity of employees is far higher than any other industry.
Though AI doesn’t have a direct impact on the lowering quantity and quality of employees, it’s a common trend that most top graduates have mostly ended up looking for roles in tech or venture capitalist companies. They end up working for consultancy companies for a few years to gain exposure, and then look beyond.
It’s been noticed that students are slowly starting to look at other business career options beyond consultancy, and the general mood suggests a decline in interest in the consultancy sphere.
Top firms like Mckinsey, BCG, and Bain have decades of consultancy experience and have worked with almost all the Fortune 500 companies in this span. Thus their information, data sets, and experience with a wide array of business problems proved to be a huge USP for the industry. These firms have managed to leverage all this data to their advantage and help new firms prevent the same mistakes that the previous ones made during their nascent stages.
The problem is, AI doesn’t need years of experience and hands-on activity to curate business strategies, etc. The problem is, AI doesn’t need years of experience and hands-on activity to curate business strategies, etc. All it requires is data banks and it can harvest this into meaningful conclusions to solve operational problems. In contrast to this, expensive management consultants need a lot of experience and know-how. Companies like XANT, previously called insidesales.com, mentions how they rely on billions of transaction details and customer profiles to help their sales people close deals.
Under ‘know-how’, there are usually two broad categories : Soft skills like communication, and Hard skills like data analytics.
Soft skills are usually very important for front-end consultants, and these skills, in my opinion, will continue to be an ace over AI. During the process of presenting to a client, it’s these skills of presentation, communication and persuasion that manage to convince them to pick up the recommended strategy. Whatever data can be brought to the table is very important, but it cannot be sold to a person by pure numerical facts. Emotions, rationale and trust are important factors that cannot be replaced by AI.
On the other hand, hard skills, in my opinion, are highly based on number crunching, data analytics and back-end processing to generate reports, summaries and statements, which from the discussion so far, would obviously hand AI the win in this domain. Humans have a tendency to forget, make mistakes and overlook some details that artificially intelligent software can never go wrong with. As long as the information input is trustworthy and accurate, so will the results.
Though in most of our analysis of the previous USPs, AI seems to be the clear winner, reputation and reliability is one front where management consultants hold the trump card. In a world of high octane business deals and billion-dollar transactions, more often than not, CEO’s and other strategic players are more biased towards reputed individuals guiding them and building strategy, rather than primarily letting data and reports generated by a machine take over. As long as values such as trust, professionalism and loyalty exist in the business sphere, it’ll be hard for software to completely replace the roles and positions of large management consultant houses, like Mckinsey, which is often informally called a ‘CEO Factory’.
The Ideal road ahead
After all the overwhelmingly strong pointers towards the dominating influx of AI mentioned above, I still strongly believe in the consultancy industry ahead because of the nature of the situation it finds itself in. It’s not new to have a path-breaking disruption in the fields of technology and business, that almost- almost puts companies and industries out of the picture. Yet, over time, companies have proved that with a synergistic attitude towards the disruption, and a motivation to embrace the change, not resist it- they can pull through.
And that’s clearly what the larger consultancy houses aim to do. Though the benefits of AI in consultancy are primarily helpful for clients, who now have to wait for less time and less money to get their recommendations, there are a lot of positives for management consultants too. To understand this, they must first understand that while AI may be able to solve complex data analytical problems, they will never be able to provide highly customized and experienced business solutions like these management consultants. Technology is simply not advanced to completely make human interference replaceable.
The influx of AI should be looked at as a boon to make the lives of the consultants easier.
Mckinsey’s acquisition of QuantumBlack [ AI-based firm ], and BCG setting up Gamma shows that these companies realize the trend and are willing to ensure nothing can replace them and use it as a tool to increase their efficiency. A lot of large companies are delving into ‘process mining’, a technology that enables them to mine data incredibly fast and analyze business processes in less than a week.
Thus, we see that there is, indeed, nothing to be afraid of for the industry, if they can keep up with the demanding upskilling that is taking place, and will continue to take place until the next industrial revolution, after AI. Failing to do so would be the only way the consulting industry would find itself in a bottleneck of problems.
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