Key Takeaways:
- McKinsey, BCG, and Bain shift about 25% of fees to outcome-based AI pricing
- McKinsey's Lilli AI saves consultants 30% time; BCG revenue rose 7% to $14.4B
- AI-native boutiques like Queen's Tower target 80% AI agents, growing at 50%
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Big Three consultants shift 25% of fees to outcome-based AI pricing
AI is dismantling the billable-hour model that built McKinsey, BCG, and Bain into a $40 billion industry.
McKinsey, BCG, and Bain are shifting roughly a quarter of their fees to outcome-based pricing as AI tools compress the hours that built their $300-to-$500-per-hour consulting model.
"This is a moment where many of the fundamentals of the professional services model are coming under challenge," Kate Smaje, McKinsey's global leader of technology and AI, said at a London briefing.
McKinsey's enterprise AI assistant Lilli now runs more than 500,000 prompts a month internally, with consultants reporting up to 30% time savings on knowledge work, according to Hunt Scanlon Media. BCG CEO Christoph Schweizer told the Wall Street Journal that 75% of the firm's largest AI cases now carry variable-fee arrangements, though less than a third of total work is outcome-based. Bain & Company said AI- and tech-enabled revenue accounts for roughly 30% of its consulting business, with leadership projecting that share to reach 50%.
The shift threatens the pyramid staffing model that has defined management consulting for decades. About 150 former McKinsey, Bain, and BCG consultants have been contracted to train AI models to perform entry-level consulting tasks, Bloomberg reported — the people who used to bill those hours now teaching a machine to replace them.
How AI Broke the Billable Hour
For three decades, the Big Three's business model rested on a simple premise: clients paid by the hour or by a fixed project fee tied to team size. Junior consultants built the slides and crunched the data. Partners sold the story. Bills ran into the millions, often without an explicit promise the strategy would work.
AI is compressing that timeline. McKinsey's UK managing partner Michael Birshan said about one in four of the firm's global fees now come from performance-based arrangements, according to Business Insider. BCG's Schweizer said the firm's revenue rose 7% to $14.4 billion in its latest fiscal year, with head count expanding as the firm rushes to meet what he called a near "infinite need" from companies for AI deployment help.
Bain has been the most direct about its AI exposure. The firm's OpenAI partnership has stretched past three years of joint client work, capped by an investment in OpenAI's new Deployment Company alongside TPG, Advent, Bain Capital, and Brookfield.
The Challengers Are Already Here
AI-native boutiques are moving to capture the market the Big Three are reshaping. Queen's Tower Advisory and Unity Advisory, both founded by former Big Four partners, are targeting teams that are "20% humans, 80% AI agents," Queen's Tower founder Mark Bunker told the Financial Times. The Management Consultancy Association says smaller firms are now growing at up to 50%, while the Big Four have cut UK graduate intake and PwC's global headcount dropped 5,600 last year.
KPMG UK's head of advisory Lisa Fernihough was unusually candid: "I want this organisation — us — to still exist. That's how disruptive I believe AI will be." KPMG has set up an "air-gapped" initiative called Project Watts to bypass normal approval processes when experimenting with AI tools alongside clients.
European private equity has committed more than 500 million euros to tax advisory firm WTS, which aims to hire 100 partners within five years.
What This Means for Investors
The publicly traded consulting and IT-services proxies face a margin question that will not go away. Accenture's share price has fallen more than 50% from its late-2021 peak, reducing market value to about $108 billion from over $260 billion. IBM faces similar pressure as its consulting arm contends with AI-compressed project timelines.
For the corporate clients of these firms — effectively most of the S&P 500 — the shift toward outcome-based pricing should deliver more measurable value per consulting dollar. BCG's Schweizer said 1.7 million people applied to the firm in 2025, with less than 1% ultimately hired, suggesting the brand still carries weight even as its pricing model evolves.
The irony is hard to miss. The Big Three made their fortunes telling Fortune 500 boards to transform themselves around technology. Now they are being forced to do the same thing first, and in public.
This article is for informational purposes only and does not constitute investment advice.
[1] AI Is Changing How Consultants Get Paid—and Much More, BCG’s CEO Says - WSJ[2] AI is forcing McKinsey, BCG, Bain to rethink consulting fees - AOL.com[3] AI threatens Big Four scale advantage as UK boutiques attack - Resultsense[4] AI Is Changing How Consultants Get Paid—and Much More, BCG’s CEO Says
