Major Firms Are Spending Big on AI “Death Stars”

To give just a few examples of how investors and large consulting firms are betting on AI to replace human professionals:

• The AI Fund (a VC operation backed by players like Sequoia Capital) invested in Ryple.ai – a platform that provides leadership coaching on demand.  
• The Josh Bersin Company – a major HR consulting firm – has developed its own AI platform, Galileo, that can provide everything from strategic advice to instantly generated forms and communications. 
• Deloitte and EY are now in the business of creating “AI employees” that work alongside clients’ human staff, while Microsoft and McKinsey have partnered on an AI platform to manage entire shared service operations.  

In short, the big-money players are betting that AI can automate and scale a wide range of human expertise.  And, given the sums of money involved, one might wonder how small to midsize firms can possibly compete?

The Force is Strong with AI

The arrival of AI consulting is similar to the advent of digital photography.  Just as digital cameras transformed how we capture and share (i.e. no more going to the drug store and waiting three days to have your film developed), AI is revolutionizing how organizations access expertise. And just as many old-fashioned camera companies initially dismissed digital cameras as toys, many consultants are now choosing to ignore the appeal of AI.

This is a problem since, objectively speaking, the advantages of AI consultants are difficult to dismiss.  AI consultants:

• Are always on call, ready to advise at 3 AM or 3 PM
• Can simultaneously support everyone from the CEO to frontline staff
• Offer year-round support for the cost of just a few hours of human consultant time

Skeptics might ask “But what about quality?  Sure, AI is cheap and convenient, but what does that matter if the advice itself is bad?”

However, this argument ignores the fact that consulting, like all professional services, follows a bell curve. Not every engagement gets the firm’s top talent – in fact, most clients work with relatively junior consultants following standardized playbooks. This is why major firms like McKinsey and Deloitte have been so successful: they’ve turned consulting into a repeatable process that delivers consistently acceptable (if rarely exceptional) results. 

Think of it like Starbucks coffee. Is it the best cup of coffee you’ll ever taste? No. But you know exactly what you’re getting, whether you’re in Seattle or Singapore. AI consulting platforms are poised to deliver this same kind of consistency at scale – and they’re getting better every day.

Moreover, the “always-on” nature of AI consultants creates opportunities for continuous improvement that traditional consulting simply can’t match. When you can test advice against thousands of real-world scenarios daily, you start to build a knowledge base that even the most experienced human consultant would envy.

So how can small firms compete against the big firms’ AI-powered empire?

A New Hope: The Boutique AI Rebellion

Let’s be clear: many small to midsize consulting firms will go under as the big firms roll out their low-cost, large-scale AI consulting offers.  But other small to midsize firms will survive and thrive by leveraging the same advantages they’ve always enjoyed over the big players (i.e., higher than average experience, unique niche expertise, a willingness to make smaller accounts a top priority.)  But this will only be possible by embracing AI as a “force multiplier.”

So what does “boutique AI consulting” look like?

• It’s specific:  Many of the companies that create the “foundational” AI models (like OpenAI, Anthropic, and DeepSeek) are predicting that their products will soon achieve “artificial general intelligence” (AGI) meaning they will perform better than the vast majority of humans on the vast majority of tasks.  However, this overlooks a serious Achilles’ heel: foundational AI models are “trained” on data sourced from publicly available online sources, meaning their output represents the “consensus of the Internet.”  Hence, if boutique consulting firms can capture their unique perspective and methodologies in AI form, they stand a chance of outwitting the foundational models.
• It’s “human-in-the-loop”: The main critique of big consulting firms is that their senior consultants will show up to the sales meeting, then hand off the actual project to junior colleagues, and those big firms will likely use AI the same way – as a substitute for face time.  However, for smaller firms where the senior partners do everything, AI can make senior consultants more available for important client conversations by fielding the low-level requests that bigger firms would hand to junior consultants.  This means boutique firms can give customers both on-demand AI convenience plus high-touch human service, too.
• It’s tailored:  As mentioned earlier, big consulting firms tend to get big by offering templatized, one-size-fits-most solutions (i.e., the metaphorical Starbucks cup of coffee.)  And while AI will allow them to offer more customized solutions, small firms are in a position to do this one better.  AI advice is only as good as the information available to the AI agent and – in our experience creating AI apps for organizations in multiple industries  – taking the time to furnish an AI agent with very specific source documents and frameworks tailored to a client’s specific situation will yield superior output.  Big firms know this, but – as is the case with their existing model – any such customization will likely be delegated to junior consultants while small firms (whose consultants are prepared to develop some basic AI literacy) should be able to provide better and more relevant customization.
  

That said, there’s one critical gap between smaller consulting firms and the big firms: small firms don’t have legions of software developers and AI experts on staff.  And efforts by small firms to develop proprietary AI platforms often suffer the same fate as when they attempt to develop traditional software: spending far too much money with custom IT vendors only to create a substandard product that the consulting firm probably doesn’t have enough money to update and maintain long-term.

Rather than attempt to build AI solutions from scratch, boutique firms might benefit from an “alliance” (i.e. partnership model) with the many smaller AI startups trying to compete with larger software companies.  This natural alignment is what led my own company to launch an “expert partner program”, co-developing / marketing AI solutions with consultants in high-demand niches.

The Empire Strikes Last (The Inevitable AI Consolidation)

History tells us that technology markets tend to consolidate around a handful of dominant players. Just look at CRM software (Salesforce and Hubspot), productivity suites (Microsoft and Google), or social media platforms (Meta and LinkedIn). As AI consulting becomes mainstream, we should expect similar consolidation, with two or three providers eventually dominating each consulting niche.

AI consulting breaks the traditional consulting growth model: where traditional firms scale linearly (more clients require more consultants), AI platforms scale exponentially (once you’ve built effective AI capabilities, you can support dramatically more clients without proportionally increasing headcount.) This creates a “winner-takes-most” dynamic where successful early movers can quickly establish dominant market positions.

However, this same dynamic creates a unique opportunity for boutique firms willing to act quickly. Right now, the barriers to entry are relatively low – most clients haven’t adopted any AI consulting solution yet, and the technology is still accessible enough for smaller players to compete. Smart boutique firms can leverage their deep expertise and existing client relationships to establish themselves as AI leaders in their niches before the market consolidates.

But this window won’t stay open forever. As the early winners emerge in each niche, they’ll reinvest their profits into improving their AI capabilities, widening the technology gap between themselves and newcomers.

Conclusion

So how can a boutique consultancy mount an effective resistance to big firms and “Big AI”? 

The short version is:

• Determine the unique aspects of your practice that would lend themselves well to an AI advisor
• Identify new clients or new audiences within existing client organizations that an AI offer would allow you to reach
• Find a tech partner and a friendly client who would be willing to pilot / provide honest feedback on your solution
• Leverage your existing client relationships to lock in (and even expand!) ahead of the coming shift to AI

This approach, executed effectively, should allow firms to remain relevant as the AI revolution jumps to light speed.

Hopefully this article inspired some useful ideas for your consulting firm: if you are interested in discussing how your practice could develop an AI offer, please consider reaching out to Parrotbox.ai for a consultation.