The strategy consulting industry, traditionally dominated by a few global giants, is now facing unprecedented scrutiny and disruption. However, it’s important to note that this industry has always been adaptable, and the current challenges are no exception. Major firms are being challenged not only by economic headwinds and technological upheaval but also by mounting criticism of their business models, talent deployment practices, and strategies that foster client dependency. As the landscape shifts in 2025, these challenges are forcing even the most established players to reconsider how they deliver value—and whether their traditional approaches remain fit for purpose.
The Traditional Business Model Under Fire
Large consultancies have thrived on a model built around high-profile client relationships, global reach, and a ‘land-and-expand’ approach for decades. This strategy involves securing an initial engagement with a client—often through senior partners—and then broadening the scope of work, embedding the firm deeply within the client’s operations. While this model has driven growth and profitability, it is now seen by many as fostering unhealthy client dependency and prioritizing firm interests over client outcomes.
The reliance on billable hours and large, multi-year projects has also come under fire. Clients increasingly question the value of paying premium fees for services that, in some cases, could be delivered more efficiently or even automated. As artificial intelligence and advanced analytics become more prevalent, the traditional justification for large teams and lengthy engagements is eroded.
Talent Deployment: The Junior Pyramid Problem
A core component of the traditional consulting model is the so-called ‘pyramid’ structure: a small number of senior partners at the top, supported by layers of managers, consultants, and a large base of junior analysts. This approach has been criticized for several reasons:
- Inexperience on the Front Lines: Many projects are staffed primarily with junior consultants who may lack the experience to tackle complex, high-stakes challenges. This can lead to generic solutions and missed opportunities for true innovation.
- Labor Arbitrage and Offshoring: Firms have increasingly offshored work to lower-cost regions to maintain margins. Labor arbitrage refers to the practice of moving work to locations where labor costs are lower, often in other countries. While this reduces costs, it can also undermine quality and consistency, especially when local market knowledge is critical.
- Overcapacity and Layoffs: The post-pandemic hiring boom left many firms with more staff than they need, especially as deal activity and client demand have slowed. This has led to layoffs, delayed promotions, and a renewed focus on cost control.
The result is a growing perception among clients that they are paying for armies of inexperienced consultants rather than the senior expertise they were promised.
Client Dependency: Land-and-Expand Reconsidered
While lucrative for consultancies, the ‘land-and-expand’ model is increasingly seen as problematic by clients. By embedding themselves deeply within client organizations, consultancies can create a dependency that is difficult to break. This dynamic can stifle internal innovation, reduce accountability, and escalate costs over time.
Clients are becoming more sophisticated in their procurement of consulting services, seeking shorter, outcome-based engagements and demanding greater transparency. There is a clear shift from open-ended projects toward defined deliverables and measurable impact.
Technological Disruption and the Rise of AI
The most significant force reshaping the industry is the rise of artificial intelligence and automation. AI is already capable of performing many structured, data-heavy tasks that once required teams of consultants, such as financial modelling, market analysis, and data interpretation. This technological shift is:
- Driving Down Price Points: As AI tools become more capable, clients are less willing to pay for work that can be automated, putting pressure on traditional fee structures.
- Enabling New Entrants: Smaller, more agile firms are leveraging AI to deliver faster, more specialized services, challenging the dominance of established players.
- Forcing Internal Change: Large consultancies invest billions in developing and acquiring AI capabilities, but adapting these technologies at scale is a significant challenge.
The firms that fail to integrate AI into their offerings and operations risk being left behind, as clients increasingly expect data-driven insights delivered at speed and scale.
Diversity, Equity, and Inclusion: A Divided Response
The consulting industry also navigates a complex landscape around diversity, equity, and inclusion (DEI). While some firms have rolled back their DEI commitments in response to political and market pressures, others have doubled down, arguing that diverse teams are not just a trend, but essential for innovation and client relevance. This commitment to diversity reflects broader societal debates and adds another layer of complexity to talent management and client engagement, but it also makes everyone feel included and valued in the industry.
Adapting to a New Consulting Paradigm
In response to these pressures, the leading strategy consultancies are making significant changes:
- Restructuring Workforces: Firms are promoting fewer partners, reducing overcapacity, and focusing on aligning headcount with current demand.
- Investing in Technology: Billions are being spent on AI, analytics, and digital transformation, both to enhance client offerings and to drive internal efficiency.
- Rethinking Engagement Models: There is a clear move toward outcome-based pricing, shorter engagements, and greater transparency, as clients demand more tangible value for their investment.
- Balancing Global and Local: Firms are reassessing their global staffing models, seeking a better balance between international expertise and local market knowledge.
The Road Ahead
Despite these challenges, the future of the traditional strategy consulting model is far from certain. The industry has always been resilient, and the combination of economic pressures, technological disruption, and changing client expectations is just another hurdle to overcome. It forces even the most established firms to adapt or risk losing relevance.
As AI and automation become more deeply embedded in the industry, the value proposition of large, junior-heavy teams is being fundamentally questioned. But with resilience and adaptability, the industry can navigate these changes and emerge stronger than before.
At the same time, the rise of boutique consultancies and specialized advisors—often leveraging advanced technology and offering more personalized, outcome-driven services—is providing clients with compelling alternatives. These challenges are agile, focused, and often better aligned with the needs of modern organizations.
The strategy consulting industry is not facing extinction but is undergoing a profound transformation. The firms that will thrive can reimagine their business models, invest in talent and technology, and deliver clear, measurable value to their clients in an increasingly complex world.