AI forcing consulting firms like McKinsey to deliver results and not charge by hours: Report

Artificial intelligence is not just changing how companies work, it is also reshaping how some of the world's biggest consulting firms make money. Clients are reportedly pushing firms such as McKinsey & Company to abandon pricing models based on the number of consultants assigned to a project or the hours they spend on it. Instead, they want to pay for the actual results these firms deliver.

According to a recent Financial Times report, clients want consultants to link their fees to measurable outcomes such as cutting costs, boosting profits or increasing market share. The reason behind this shift is Artificial Intelligence. Companies are using AI to automate tasks and handle work that once required teams of analysts and junior consultants, including data analysis, research, identifying business problems and generating recommendations.

For decades, consulting firms justified large bills through their expertise and manpower. A project could involve dozens of consultants working for months, with clients paying largely based on the resources deployed. However, AI is now challenging that model. Clients are reportedly pointing out that if software can analyse large datasets in minutes rather than days, there is less reason to keep paying for the number of hours worked rather than the value created.

The report suggests that a similar change in pricing structures is also being seen across other professional services industries. Lawyers, accountants and auditors are facing pressure to pass on some of the efficiency gains created by AI. As businesses become more comfortable using AI tools themselves, they are increasingly willing to pay for the successful completion of a task rather than the effort involved in getting there.

Notably, this approach is already visible in the AI industry. Some AI companies charge customers based on completed actions rather than subscriptions alone. FT highlights how AI agent company Fin, for instance, charges per customer case resolved by its bot, while identity verification platform iDenfy charges per verification completed. Salesforce has also introduced task-based pricing for some AI-powered functions.

For consulting firms, however, the transition is not straightforward. Charging for outcomes can make revenue less predictable because results are not always entirely within a consultant's control. Economic downturns, geopolitical tensions, supply-chain disruptions or resistance within a client's organisation can all affect whether a project achieves its intended goals.

Nevertheless, FT notes that McKinsey is already adapting internally to this new reality. The firm has reportedly increased the share of partners' compensation linked to equity and is retaining more cash, moves that could help it manage less predictable income streams if outcome-based pricing becomes more common.