AI erodes consulting revenue as Accenture, Capgemini slide 27% to 31%

AI is eroding the IT consulting industry's core implementation business, with Accenture shares down 27 percent and Capgemini down 31 percent this year as clients cut fees and internalize work.

SAP Chief Financial Officer Dominik Asam said AI will "massively replace" some consulting functions, and the software maker claims its system overhaul will help clients cut up to 50 percent of external consulting costs.

Source Global estimates clients will spend $420 billion on technology consulting this year, up 8 percent, but the growth is concentrated in AI-related demand of $140 billion. The larger implementation business, worth $236 billion, faces structural pressure as clients from Bayer to Bristol Myers Squibb deploy AI tools that shrink the billable hours consultants once owned.

The selloff has already compressed valuations across the sector, and the pressure is spreading to enterprise software. Intuit fell 12 percent in a single session this month after guiding to 9 to 10 percent revenue growth for fiscal 2027, down from 14 percent, as investors priced in AI's effect on TurboTax and QuickBooks. Gartner projects up to $234 billion in enterprise application spending could be exposed to agentic AI by 2030.

Clients Push Back on Fees and Contracts

Bristol Myers Squibb Chief Digital and Technology Officer Greg Meyers said consulting managed-services costs are "collapsing" as AI takes over monitoring work that previously required third-party staff. The drugmaker has pushed external advisers to cut rates or shift from hourly billing to fixed-price and performance-linked contracts. "If we're not satisfied, bringing work in-house has never been easier," Meyers said.

SharkNinja Chief Executive Mark Barrocas said the appliance maker's consulting spend is "definitely decreasing." The company, which generated $6.4 billion in revenue last year, completed a sales-promotion and media-spend analysis in eight weeks using Palantir technology and deployed AI-driven demand forecasting. "Working with technology partners and internal owners who know the business is far more effective than third-party advisers who don't," Barrocas said.

European banks are following the same path. UniCredit cut external consulting spending 24 percent in the first half, while Société Générale reduced it 9 percent. Commerzbank plans to invest €600 million in AI by 2030, targeting €500 million in annual savings, partly from smaller consulting bills. AI chief Oliver Dörler said work that once took external vendors months to analyze source code and log files "AI can now complete in days."

Software Vendors Bypass Consultants

SAP is embedding AI into its systems so consultants complete work faster, bill fewer hours, or are skipped entirely. Bayer, in the middle of a six-year SAP overhaul, has deployed 30 AI agents to support coding and testing. Project lead Jochen Kamp said the goal is to "substantially reduce" the number of consultants on the deployment. "Consulting resources will change fundamentally in both number and skill set," Kamp said. "The traditional consultant must change, and fewer will be needed."

Capgemini Chief Executive Aiman Ezzat dismissed SAP's 50 percent cost-reduction claim as "ambitious," saying the firm has redesigned its SAP deployment approach to lower implementation costs and speed delivery. "We've become more productive, more industrialized, and moved to offshore models," Ezzat said. "If I still worked the way I did 20 years ago, I'd need three to four times the staff."

The industry still has defenders. British American Tobacco said external advisers have become "more important" in its AI-driven three-year cost-cutting plan, which has eliminated 5,500 jobs and outsourced 3,500 more to firms including Accenture. Volkswagen, evaluating plans to cut up to 100,000 jobs and close four German plants, has turned to Boston Consulting Group and McKinsey.

Yet client satisfaction data is sobering. Source Global found only one-third of clients rate externally led IT projects as "fully successful," and the Big Four — Deloitte, EY, PwC, and KPMG — score lower than Accenture and other IT specialists. Source Global's Nicholas Jotischky said 55 percent of Big Four clients plan to increase usage over the next 12 months, down from 80 percent a year earlier. "Competition is heating up," he said.

Investors are watching whether the new AI-related consulting demand of $140 billion can offset losses in the $236 billion implementation business. Illumina Chief Executive Jacob Thaysen said the consulting industry's future must focus more on strategic advice for leaders, as AI lets companies advance projects on their own before seeking large implementation partners.

This article is for informational purposes only and does not constitute investment advice.