Generative AI Fuels Rapid Revenue Growth for Leading Consulting Firms

Key Insights:

• BCG now earns 20% of its revenue from AI consulting, a rapid increase over two years.
• IBM and Accenture have secured billions in AI consulting deals, underscoring growing demand.
• IBM’s Ask Procurement tool helps businesses conduct accurate searches, addressing AI reliability concerns.

Following the release of ChatGPT in 2022, companies like Reckitt Benckiser, which produces Lysol and Mucinex, sought consultants’ assistance navigating the emerging artificial intelligence landscape. The marketing team at Reckitt Benckiser turned to Boston Consulting Group (BCG) for guidance, exemplifying a trend where companies seek external expertise to leverage AI technology.

BCG reported that AI-related work now constitutes 20% of its revenue, a dramatic increase from two years ago. Vladimir Lukic, BCG’s managing director for technology, noted the surge in demand:

“There’s a genuine thirst to figure out what this means for their businesses.”

Growing Demand for AI Expertise

The consulting industry is witnessing substantial growth due to the increasing interest in generative AI technology. Firms like Boston Consulting Group, McKinsey & Company, IBM, and Accenture have experienced a surge in sales and are expanding their workforce to meet the growing demand.

With a consultancy team 160,000, IBM secured over $1 billion in sales commitments related to generative AI for consulting and its watsonx system. Accenture recorded $300 million in AI-related sales last year, and McKinsey projected that 40% of its business this year would involve generative AI KPMG International, which had no generative AI revenue a year ago, aims for over $650 million in U.S. business opportunities tied to the technology in the past six months.

Nigel Vaz, CEO of Publicis Sapient, compared the current demand to the dot-com boom, where companies eagerly sought websites without fully understanding their benefits.

“This is similar. Companies are saying: ‘Don’t tell me what to build. Tell me what you can build,’” he stated.

Varied Roles and Mixed Results

Consulting firms are tackling various AI-related tasks, from advising on regulatory compliance to developing AI customer support systems and creating safeguards to prevent errors. However, results have varied. IBM’s work with McDonald’s on an AI-powered voice system for drive-through orders encountered issues when customers received incorrect orders. Despite this setback, IBM continues collaborating with McDonald’s on other projects and exploring systems similar to those of other restaurant chains.

Conversely, IBM’s collaboration with Dun & Bradstreet on a generative AI system, Ask Procurement, showed promise. The tool helps employees conduct detailed searches and generate proposal requests, focusing on accuracy and traceability. Gary Kotovets, chief data and analytics officer at Dun & Bradstreet, emphasized the importance of mitigating concerns about AI.

“Hallucinations are a real concern and, in some cases, a perceived concern,” he remarked.

Adapting and Innovating

The consulting firms are also involved in speculative projects, sometimes working without pay to demonstrate their capabilities. McKinsey’s AI group, QuantumBlack, developed a customer service chatbot for ING Bank, incorporating safeguards to avoid providing financial advice. Despite the challenges of ensuring accuracy and reliability, the chatbot now handles 200 of 5,000 daily customer inquiries, with human oversight to prevent errors and inappropriate language.

In collaboration with Boston Consulting Group, Reckitt Benckiser developed an AI platform for creating local advertisements in multiple languages and formats. Still in testing, the system promises to streamline the ad creation by making it 30% faster. Becky Verano, vice president of global creativity and capabilities at Reckitt, noted the ongoing adjustments required as technology evolves, praising BCG for bringing structure to their efforts.

The demand for AI-related consulting services is revitalizing the consulting industry after a slowdown following the pandemic. According to IBISWorld, the management consulting industry in the United States is projected to achieve $392.2 billion in sales this year, marking a 2% increase from the previous year.