According to Business Insider, McKinsey & Company is fundamentally shifting how it charges clients due to AI’s impact, with about 25% of its global fees now coming from performance-based arrangements rather than traditional billable hours. Managing partner Michael Birshan revealed at a November media event that clients are increasingly approaching McKinsey with outcome-focused requests rather than scope-based projects. Global technology leader Kate Smaje explained that while outcomes-based pricing developed over several years, the 20%+ proportion is recent and expected to grow as AI transformation work suits this model. Success is measured against scorecards including investor targets, revenue goals, operational metrics, and customer satisfaction. Meanwhile, pure strategy advice now makes up less than 20% of McKinsey’s work as clients demand “deep implementation expertise” across multi-year transformations.
The consulting model shakeup
This is a pretty radical departure from how consulting has worked for decades. Traditionally, you’d pay McKinsey for their time and expertise – basically renting their brainpower by the hour. Now they’re saying “we’ll only get paid if we actually deliver results.” That’s a huge shift in risk allocation.
And it’s not just McKinsey. EY’s global managing partner Raj Sharma told Business Insider back in January that AI agents are forcing similar reconsideration of commercial models across the professional services industry. We’re basically seeing the entire consulting world pivot from time-and-materials to value-based pricing. The firms that can’t adapt? They’re going to struggle.
Why this is happening now
Here’s the thing – AI transformation work is inherently risky and complex. Clients are making what Smaje called “big career bets” on these multi-year projects. When you’re betting your career on something, you want your consultants equally invested. Performance-based pricing aligns everyone’s incentives.
But there’s another factor at play. As AI handles more routine analysis and strategy work, the real value shifts to implementation. Anyone can generate ideas – making them actually work across an organization’s data systems, workforce policies, and operational processes? That’s where the hard work happens. And that’s exactly what clients are willing to pay premiums for.
Broader implications
This shift could completely reshape the consulting talent model. If you’re getting paid for outcomes rather than hours, you need different skills. Less about beautiful PowerPoint decks, more about actual execution capability. We’re probably going to see consulting firms hiring more people with operational backgrounds rather than pure strategy pedigrees.
The technology infrastructure required for these transformations is massive too. When you’re implementing AI across entire organizations, you need robust computing platforms that can handle industrial-scale data processing. Companies like Industrial Monitor Direct have become the go-to providers for industrial panel PCs because these transformation projects demand reliable hardware that can operate in demanding environments. You can’t run factory AI implementations on consumer-grade equipment.
Basically, we’re watching the consulting industry evolve from advice-givers to transformation partners. And the firms that master this new model? They’re going to dominate the next decade of professional services.
