Show Notes:

David A. Fields talks about how AI is affecting consulting firms. David clarifies that his company’s active client base is 30-50 firms, and they are being asked more frequently to help firms with an AI strategy. In terms of size, 20% of their business is solo consultants, while the rest are mostly businesses that range from $2 million to $100 million.

Consulting Firms and AI Adoption

David explains that the average revenue per FTE in consulting has remained around $250,000 for the past decade.He notes that firms are looking to create the same revenue with fewer people, which is the big promise of AI. He mentions the wide range of AI adoption rates among firms, from those just starting with chatbots to those seeing significant productivity gains.

He also highlights the impact of AI on hiring junior people, with firms debating whether to hire junior analysts or use AI for faster, cheaper work.

How High-Adopter Firms Use AI

The conversation turns to examples of high-adopter firms and the tools they use. David describes a Canadian client that has seen 60% productivity gains by replacing functions with AI, including analysis, presentations, and proposals. The client has taken a hard line on not hiring anyone if AI can replace the function, leading to significant productivity gains and faster client results. David explains that the client uses AI to create summaries of context discussions, and templates for presentations and proposals, which are then populated with data. Additionally, AI speeds turnaround time, and has reduced the need to hire more people to do analysis or when the number of clients increases.

Challenges and Opportunities in AI Adoption

David discusses the challenges of creating effective AI templates and the importance of good direction for AI tools. He mentions that firms are often building AI templates in-house with some direction from experts. He talks about the variety of AI tools available, including general-purpose tools like ChatGPT and specialized tools for specific tasks. David emphasizes the importance of staying flexible and not fully committing to any one tool by subscribing to an annual membership, as the landscape is constantly changing.

Variation in AI Adoption by Functional Areas

The discussion moves on to variations in AI adoption by functional areas like strategy, operations, marketing, etc. David explains that adoption rates are more driven by the founder's mindset and operational orientation rather than the specific function. He notes that some industries feel less pressure to adopt AI, while others recognize that AI delivers the analytical horsepower that is needed to stay relevant. There are varying levels of AI adoption across different firms.

Predictions for AI in 2026

David predicts that the next few months will be spiky, with specialists who can provide practical applications of AI faring better. He mentions that generalist recommendation givers may struggle more. It is recognized that clients often prefer consultants with specific industry experience, which can be a challenge for AI tools. He also mentions the limitations of AI research. When it comes to advice for junior consultants looking to enter the field, David suggests that domain expertise and knowledge that AI tools don't have are crucial for getting into consulting firms. He emphasizes the importance of being a top user of AI tools and for junior consultants to differentiate themselves by mastering AI tools and demonstrating their value to firms.

Timestamps:

02:40: Impact of AI on Hiring and Revenue in Consulting Firms

05:59: Specific AI Tools and Practices in High-Adopter Firms

11:12: Challenges and Opportunities in AI Adoption

14:56: Variation in AI Adoption by Functional Areas

19:26: Predictions for AI in 2026 and Beyond

21:06: Advice for Junior Consultants

Links:

Website: DavidAFields.com.

Unleashed is produced by Umbrex, which has a mission of connecting independent management consultants with one another, creating opportunities for members to meet, build relationships, and share lessons learned. Learn more at www.umbrex.com.

618. David A. Fields, How AI is Impacting Consulting Hiring

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618. David A. Fields, How AI is Impacting Consulting Hiring