AI Consultants
Everyone's an expert these days
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Friends,
Businesses can get disrupted by technological change. As we are seeing now with AI, companies try to make themselves relevant, try and reinvent themselves - and potentially drive growth or save themselves. The traits of these types of era are large investments over a short period. In many instances, companies don’t know what to do - and turn to consultants. And these consultants are cleaning up right now. Im not sure they’re all experts, but I’m sure they have a great slidedeck. Some examples of revenue projections for 2024 :
BCG at $2.4B: “The chief executive of BCG has said the $12bn consulting firm expects to generate a fifth of its revenues in 2024 from helping corporations integrate artificial intelligence into their businesses, a share it projects will reach 40 per cent by 2026.” BCG says AI consulting will supply 20% of revenues this year
IBM at $1B: “IBM, which has 160,000 consultants, has secured more than $1 billion in sales commitments related to generative A.I. for consulting work The A.I. Boom Has an Unlikely Early Winner: Wonky Consultants
Accenture at $2.4B: Accenture is one of the firms making the most money from generative AI right now. The company just reported that it had $600 million in new generative AI bookings last quarter. That's a whopping $2.4 billion annualized per year selling generative AI services” Accenture is one of the firms making the most money from generative AI right now.
McKinsey at $4B : Despite a broader cooldown in the consulting industry, McKinsey pulled in a record $16 billion in revenue in 2023 thanks to the promise of generative AI. (40%) McKinsey says it needs to reinvent itself and that AI is the answer: 'It's going to be most of what we do in the future'
Booz Allen Hamilton is currently at about $600M, so it really does feel like a major chunk of every consultancy’s revenue.
If you took a conservative 10% of Deloitte ($65B), PWC ($50B), EY ($50B), KPMG ($35B) ‘s Revenue - thats’s another $10B. So, that makes it more than $20B from AI consultancy to support the new wave.
The reason why I share these numbers with you is to demonstrate that in two very short years, consultancies have jumped on a big shift that has engulfed the world. It’s only been like this once before in my lifetime.
Also, bear in mind that deep work and experimentation is happening at pace in-house. Where I work, Avallain, we are experimenting with building around LLM models to strengthen our own business models. How might you append content to what we do? How might we create more trust around AI? We dont spend on the advisory be ause we have researchers and technical folk who have the streetsmarts to build.
At other companies, there may not be the liberty of spending on high-charging consultants - so innovation needs to be build or learnt. And I think there is a burgeoning market for single-niche AI consultants who are running workshops on “How to use ChatGPT for X”. These businesses won’t remain long term as there we we move to using AI without realising it, and as companies re-envision their products beyond simple generations and towards services that do what you need.
In the meantime, there will be much revenue to be gleaned by the consultants. But bear in mind that while many know what they are talking about, many aren’t practitioners - and this is a new space. There are only a few real experts.
Stay Curious - and don’t forget to be amazing,
Here are my recommendations for this week:
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AI’s $600B Question: Follow up to last week - The AI bubble is reaching a tipping point. Navigating what comes next will be essential. Since September 2023 we have had the easing of GPU supply shortages, growing GPU stockpiles, and OpenAI retaining a significant share of AI revenue, tripling the upside of AI revenue available. Future challenges include pricing power, investment risks, depreciation, winners versus losers in the AI infrastructure domain, and the potential economic value of AI. My thoughts revolved around the fact that we need to be measured amidst all the speculative trends and think about the long-term journey and rewards of innovation in the AI sector and across many others.
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