AI sets up Kodak moment for global consultants

Eastman Kodak

24/10/2025 11:40

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Aimee  Donnellan

DUBLIN, Oct 24 (Reuters Breakingviews) - Management consultants are getting closer to their Kodak moment. The likes of $155 billion Accenture ACN.N made their mark by charging corporate clients way less than what they would have had to pay to provide IT, cyber protection and offshore call centres themselves. Artificial intelligence is making the $1 trillion industry’s dynamics look problematically like that of the camera giant that famously filed for bankruptcy protection in 2012 - after having its lunch eaten by digital competition.

As the AI boom develops, consultants are in a tricky spot. The pandemic, inflation and economic uncertainty have encouraged many of their big clients to tighten expenditure. The U.S. government, one of the biggest spenders, has been cancelling multiple billion-dollar contracts in an effort to conserve cash. In March, 10 of the largest consultants including Deloitte, Accenture, Booz Allen Hamilton BAH.N, IBM IBM.N and Guidehouse were targeted by the Department of Government Efficiency to justify their fees. As a result, the largest listed players’ shares have collapsed by up to 30% in the past two years, against the S&P 500’s 50% jump.

AI is, in some respects, a boon. In September, Accenture said it had helped it cut 11,000 jobs, and CEO Julie Sweet is set to augment that with staff that cannot be retrained. Salesforce CRM.N recently laid off 4000 customer support workers. Microsoft MSFT.O has halted hiring in its consulting business.

Unfortunately, big clients are cottoning on to the advantages too. One finance chief of a large UK company outlined the issue for Breakingviews via an illustrative example. Say an outsourced project costs the client $1 million to do themselves, and Accenture and the like have historically been able to do the same job for $200,000. With the advent of machine learning, companies can do the same work for just $10,000.

This gives clients considerable leverage. If consultants won’t lower their prices to near the relevant level, the client can find one who will. Or just do the job itself.

With a revenue cliff on the horizon, management consultants have a few options. They can try and improve their AI offering by scooping up smaller AI players like $6 billion EXL EXLS.O, which helps financial services and healthcare clients with AI transformations. These kinds of deals could help accelerate the pace at which they complete projects. Alternatively, they could seek to merge their whole companies.

But this is unlikely to deliver much in the way of synergies. Consultancies make their money deploying their best people on big projects. A tie-up could potentially lead to an exodus of talent.

Either way, none of this will stop clients demanding knockdown prices. Kodak did emerge from bankruptcy protection in 2013 as a smaller company that is now worth around $500 million - a far cry from the $30 billion-plus it fetched in its 1990s heyday. The risk for the consultants is a similar valuation downer.

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CONTEXT NEWS

Accenture on September 25 unveiled a six month, $865 million restructuring to realign its workforce and operations for rising demand in digital and AI services.

The plan includes severance and selected divestitures, with savings redirected to staff training and operational efficiency.

The Dublin-based company expects about $250 million in charges in the November quarter, on top of $615 million recorded in the fourth quarter, for a total of $865 million.

Big consultants are underperforming the wider stock market https://www.reuters.com/graphics/BRV-BRV/klvybxywjpg/chart.png

(Editing by George Hay; Production by Shrabani Chakraborty)

((For previous columns by the author, Reuters customers can click on DONNELLAN/Aimee.Donnellan@thomsonreuters.com))