March 2024
Generative AI is transforming professional services. When I was at Boston Consulting Group, we did a massive study in collaboration with Harvard Business School on how GenAI would impact consultants’ productivity (working paper below).
[https://www.hbs.edu/ris/Publication Files/24-013_d9b45b68-9e74-42d6-a1c6-c72fb70c7282.pdf](https://www.hbs.edu/ris/Publication Files/24-013_d9b45b68-9e74-42d6-a1c6-c72fb70c7282.pdf)
For tasks that are purely generative in nature, generative AI powered tools like chat-based assistants can be a godsend for junior professionals who are writing emails, creating interview guides or summaries, drafting memos, making slides, etc. The “double-edged sword” of GenAI, however, is that many firms (not all) bill their clients for their time, and therefore do not have an immediate financial incentive to do their work faster.
This has led many startups to start by focusing on non-billable work that plagues consulting firms, including:
I’ve spent 7 years in professional services firms (AlphaSights and BCG) and have seen first-hand the time-consuming tasks that plague early-career professionals in these firms. Often analysts and associates are assigned tasks are repetitive in nature, require little intellectual horsepower, and are not in direct service to clients.
Economic uncertainty can be a major headwind for consulting firms, as evidenced by the massive slowdown all firms faced from late 2022 through 2023. Mid-size or boutique firms were particularly hit hard, and sought to cut headcount quickly to reduce opex and weather the storm. Firms learned a painful lesson when they paused campus recruiting in the Great Recession, and their pyramid structures suffered for many years after. The lesson learned was to cull junior ranks instead of pause the hiring machine, and that approach has required remaining staff to be more productive and do more with less. GenAI purpose-built for consulting firms will continue to gain steam, particularly for tasks like proposal development.