Deloitte tells its own consultants: AI is coming for the billable hour
An internal town hall at Deloitte stirred up frustration among the firm's own consultants. Management's message: the classic hourly billing model is under massive pressure in the age of AI.
According to a Wall Street Journal report, Jason Manstof, a leader in Deloitte's US public sector consulting division, showed a chart last month projecting the decline of hours-based consulting work through 2035. The green bar at the bottom, representing the industry's bread and butter, shrinks to a thin sliver of the total market.
"The not-so-great news is that type of work, even though still a significant part in 2035, will only be a part of the overall picture," Manstof said during the webcast, which the WSJ was able to review. AI agents, still in their early stages, would grow exponentially and make up the majority of the expanding professional services market by 2035.
One Deloitte consultant summed up the event for the WSJ: "They heavily implied our model is toast. We're basically getting replaced by robots." A Deloitte spokesperson said the company is making "significant investments to lead this human-led, AI-powered shift for our industry."
The consulting industry is trying to reinvent itself by acting more like a software or product business. Instead of renting out human labor by the hour, firms want to sell fixed-price subscriptions or flat-rate solutions. But the shift is bumpy. When projects run longer than planned, firms eat the costs. Payments get unpredictable. Cash flow problems loom. Disputes over subjective success metrics can wreck client relationships.
McKinsey and Boston Consulting Group are pushing harder toward outcome-based pricing models. More than 30 percent of McKinsey's global fees already come from such models, according to senior partner Shelley Stewart III, the WSJ reports. Pat Petitti, CEO of AI consulting platform Catalant, doesn't see this as a philosophical choice, though. He calls it an "existential scramble" for new revenue models: "AI is destroying their business model."