The adoption of generative AI by consulting firms is causing significant disruption in the industry, leading to workforce shakeups and layoffs. In recent months, major firms like PwC, EY, Accenture, and KPMG have announced job cuts as they embrace AI to automate knowledge work processes. For example, PwC cut around 2% of its U.S. staff, while EY eliminated 150 roles and invested $1.4 billion in an enterprise AI platform. Accenture also slashed 19,000 positions due to slowing growth and rising tech costs.
McKinsey & Company is offering senior staff up to nine months’ salary to voluntarily leave the firm, reflecting a downturn in consulting spending driven by AI. Similarly, KPMG is realigning skills as AI platforms replace parts of the audit process and routine tasks, leading to job cuts in the audit department.
The rapid wave of AI-driven layoffs is evident in IBM CEO Arvind Krishna’s acknowledgment that AI has replaced hundreds of routine HR roles with AI agents. This shift is causing anxiety among employees, who perceive AI as a threat to their roles, leading them to create shadow AI apps defensively.
Elite consultants and high performers are reinventing themselves quickly to avoid being impacted by AI-driven layoffs. Many are developing shadow AI apps using Python to automate tasks like proposal and pitch automation, financial modeling, and client relationship management. These apps provide faster and more efficient insights, helping employees protect their roles in an industry undergoing significant change.
Python has emerged as the language of reinvention for consultants, with many top-tier strategists and practice leaders creating custom apps to enhance analysis and insights beyond existing AI tools. These apps leverage APIs from platforms like Open AI, Google, and Perplexity, with tools like Google Colab and Replit used for development.
By combining APIs and search engine IDs from various platforms, consultants are developing shadow AI apps with enterprise-grade reach, delivering hyper-customized insights to clients. The proliferation of unauthorized AI apps has led to the emergence of shadow AI as the new consulting stack, empowering consultants to produce exceptional work in less time.
The scale of shadow AI in consulting is significant, with estimates suggesting over 74,500 active shadow AI apps in use. This number is projected to grow rapidly in the coming years, highlighting the need for strategic governance to manage risks associated with shadow AI. A blueprint for governance includes conducting shadow AI audits, creating an Office of Responsible AI, implementing AI-aware security controls, and integrating AI governance within existing frameworks.
In conclusion, the strategic integration of shadow AI is crucial for consulting firms to maintain a competitive edge in a rapidly evolving industry. While the adoption of AI may lead to job cuts, embracing AI strategically can help firms deliver value to clients more efficiently. It is essential for firms to proactively manage shadow AI risks and harness its potential to drive innovation and growth.
