AI and Trump put squeeze on consulting firms as industry’s post-pandemic boom fades

From the Dossier

Entry 18 of 26. Section B: Industry-wide structural erosion. Back to the Dossier

Summary

DOGE-driven federal contract cuts (affecting Deloitte and Booz Allen most heavily) and AI’s impact on hourly billing. Consulting-industry analyst Tom Rodenhauser identifies the core economic issue: a firm that charges for time has to change its commercial model once the time goes away. He adds that AI is making consulting more efficient without creating more demand for it, so the firms will eventually “run out of work”. McKinsey pushed back on the record, saying it is using AI to transform how the firm operates.

Source description

A sourced account of both pressures: DOGE-driven federal contract cuts (which affected Deloitte and Booz Allen most heavily) and AI’s impact on hourly billing. A consulting-industry analyst notes the core economic issue: AI makes work faster, but the traditional model charges by the hour, so efficiency directly cannibalizes revenue. The piece includes McKinsey pushing back on-record, with a senior partner framing the firm’s own AI adoption as an efficiency story.

Credibility assessment

The inclusion of McKinsey’s rebuttal strengthens the piece’s balance and independence. Under Rule 3, the definition of “efficiency” is worth auditing: AI makes work faster, but the billable-hour model means efficiency cannibalizes revenue. This is a structural contradiction, not a matter of opinion.