For nearly a century, McKinsey & Company has occupied a rarified perch as the elite advisor to CEOs, governments, and boardrooms across the world. Its consultants—often MBAs from the likes of Harvard, Wharton, and Stanford—once commanded deference bordering on awe. Their PowerPoint slides were gospel, their recommendations the blueprint for billion-dollar strategies. But today, that aura faces a threat no competitor has ever posed: Artificial Intelligence.
In an era where software can generate business plans, synthesize reports, and even produce McKinsey’s trademark crisp prose in seconds, the entire business model of Big Consulting is under siege. And no firm feels the heat more acutely than McKinsey itself. As The Wall Street Journal reported, the firm’s own executives admit the scale of the challenge is nothing less than “existential.”
“AI can increasingly do the work done by the firm’s highly paid consultants, often within minutes,” WSJ observed in its feature.
The Business Model That Built McKinsey
To understand why AI is such a disruptive force, you have to appreciate how McKinsey and its peers like Bain and BCG have made their money for decades.
Leverage is the foundation: partners sit atop pyramids of junior consultants, who do most of the heavy lifting—research, analysis, modeling, and slide production. A single engagement manager might lead a team of 10 or more. For each month of work, McKinsey charges six- or seven-figure fees, often billing clients three times the cash compensation of each junior staffer.
This approach has always depended on a perception that armies of bright, credentialed young analysts were irreplaceable. That perception is now crumbling. As Bob Sternfels, McKinsey’s global managing partner, told the Journal:
“AI is now a topic of conversation at every meeting of McKinsey’s board.”
It’s no wonder. AI systems can perform in seconds what once took weeks: consolidating reports, summarizing interviews, even generating presentations in the firm’s own voice. McKinsey’s most-used AI bot today isn’t even an analytics tool—it’s a writing assistant that drafts documents in the “McKinsey tone.”
A Smaller Pyramid—and Shrinking Profits
Traditionally, a strategy project required an engagement manager plus 14 consultants. Today, it might need just two or three consultants—and a suite of AI agents that never sleep or take vacations.
“Clients will expect much smaller and more senior-heavy teams,” noted a former McKinsey partner in The Financial Times. “That throws a wrecking ball into how McKinsey generates enough revenue to produce the lofty pay to which its top brass has become accustomed.”
If AI can automate the legwork, clients inevitably ask: Why pay seven figures for a deck we can largely assemble ourselves?
The strain is already visible. McKinsey has shrunk its global headcount from 45,000 in 2023 to 40,000 in 2025, according to the The NY Budgets—a staggering reduction for a firm that grew rapidly over the past two decades.
AI Advising: Lifeline or Illusion?
McKinsey’s strategy, for now, is to pivot: from being a firm that helps clients “do strategy,” to being one that helps them implement AI. As Wired reports, the firm claims advising on AI now accounts for 40% of its revenue.
Skeptics question whether that figure is inflated. “It’s defined as broadly as possible to sound like they’re at the bleeding edge,” one consultant told Bloomberg. Even if true, that shift doesn’t solve the core problem: AI is commoditizing much of what made McKinsey indispensable.
In the dot-com era, a rush of new demand offset the commoditization of some advisory work. But in 2025, that surge hasn’t materialized. Corporate budgets remain tight, and procurement departments are under pressure to justify every dollar spent on consultants—especially when a chatbot can produce first drafts of the same slides.
A Recruiting Challenge Years in the Making
McKinsey has long marketed itself as the ultimate destination for elite graduates—a place where brilliant young people can earn big paychecks and a ticket to the C-suite. But if AI deflates profit margins, the economics supporting that model begin to unravel.
As a New York Times retrospective on McKinsey’s past noted, the firm once responded to similar pressures in the 1980s by raising partner pay to keep up with Wall Street and private equity. To fund the increases, it expanded the size of junior teams. That strategy simply won’t work in the age of AI, when clients want leaner teams and more automation.
Even McKinsey’s unique brand of “eliteness”—the intimidation factor of sending a dozen Ivy League MBAs to a meeting—has eroded. As one ex-partner told The NY Budgets:
“Today, the executive suite is stocked with people who went to the same schools, worked at the same banks, and read the same case studies. They no longer feel like they need McKinsey to translate the world for them.”
Inside the AI Transformation
The firm has responded with an all-out push to integrate AI internally. Thousands of AI agents now help consultants assemble PowerPoint decks, take notes, and check logical consistency.
McKinsey is piloting models to auto-generate detailed strategy recommendations. The company is exploring how AI can facilitate “co-creation” with clients, moving away from static reports to real-time workshops and simulations.
Yet even these changes come with risks. A growing chorus of observers worries that AI-generated analysis will create an illusion of certainty and precision—while propagating errors. A recent FT op-ed warned:
“There’s an unspoken fear that clients will treat AI outputs as gospel, when in fact many are based on data that is incomplete, outdated, or wrong.”
A Future of Smaller, Nimbler Firms?
Ironically, the same forces threatening McKinsey’s leverage model may benefit smaller consulting shops. With AI leveling the playing field, boutique firms can compete more effectively—especially those with specialized knowledge or access to proprietary networks.
As Nick Studer, CEO of Oliver Wyman, told the Journal:
“Companies don’t want a suit with PowerPoint. They want someone who is willing to get in the trenches and help them align their team.”
McKinsey, for its part, has begun offering more outcomes-based contracts—tying compensation to measurable results rather than billable hours. Roughly a quarter of the firm’s revenue now comes from these agreements.
None of this means consulting is dying. But the industry is in the midst of an epochal shift—and no firm embodies the stakes more than McKinsey.
If AI keeps advancing, if clients keep demanding leaner teams, and if junior staff no longer generate leverage at historic margins, the world’s most famous consultancy may look very different a decade from now.
As one ex-partner told Wired:
“McKinsey used to be the firm you hired because no one ever got fired for hiring McKinsey. But when your board asks, ‘Why didn’t you just use AI?’—what will you say then?”
