Consulting Firms Face AI Errors and Rising Pay
Consultants at Deloitte can usually expect higher pay packets than peers at other Big Four firms, but last year’s performance prompted a slowdown in promotions and bonuses. UK boss Richard Houston recently sent a more positive email to staff, revealing that the bonus pool would increase by 14% and that the firm expects to surpass its profit targets for the year ending 31st May. Houston attributed the improved results to better pricing and higher staff utilisation, or more hours billed to clients. According to the Financial Times, this financial recovery comes alongside a shift in how partners at McKinsey are compensated.
At McKinsey, the traditional model for partner remuneration is shifting. Partners typically receive a few percentage points of the firm’s “additional award” in the form of equity, but this cash portion may decrease. A source told the FT that the equity share could rise by an estimated 3 to 5 percentage points. The firm is moving toward outcome-based pricing instead of the traditional billable hours model, which creates more unpredictable cash flows. By increasing equity, McKinsey aims to provide a cash cushion that protects partners from delayed payments or reduced fees if targets aren’t met.
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Consultants have aggressively integrated AI into their work, recognizing that technologies like generative AI could eventually replace lower-level tasks. EY reported a 30% increase in AI-related revenue during its 2025 financial year. Despite these gains, the industry faces internal contradictions. While some firms worry AI will erode entry-level work, others are expanding their junior hiring.
Bain & Company, BCG, and Alvarez & Marsal are planning to ramp up recruitment despite the looming threat of AI. Bain managing partner Clare Gordon told The Times that the firm had doubled its recruitment targets so far this year and expects graduate hiring to rise by 25% compared to 2025. BCG stated it plans to hire consistent, or slightly increased, numbers this year. Antonio Alvarez III, who leads A&M’s European practice, confirmed the firm is bringing more junior staff on board.
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Artificial intelligence has also led to some public embarrassments. EY Canada had to retract a study on loyalty reward programs after researchers flagged it on the AI-text identification platform GPTZero. The report contained fake footnotes and “hallucinated” data. In Australia, Deloitte admitted it used AI to help produce a report for the government that contained false references and a fabricated quote from a judge. The firm offered a partial refund for that project.
Internal issues continue to plague some firms. KPMG Australia has faced a significant leadership change following a whistleblower scandal. Chief executive Andrew Yates resigned last week after admitting that investigations into alleged misuse of client information to win audit contracts fell short. The firm’s former COO, Eileen Hoggett, has also stepped down from her role but remains an audit partner while investigations continue. The shift in compensation models at McKinsey and the recent departures at KPMG highlight the ongoing challenges facing the consulting sector as it balances profit targets with internal stability.
