The advent of artificial intelligence (AI) had raised India Inc’s hopes—and then they came crashing down.
Companies that expected the largest consulting and advisory firms to bring down their rates with the growing use of AI came in for a rude shock. The consulting and advisory firms refused to budge as far as billing clients was concerned.
Their defence: any cost benefit brought about by the reduction in the number of analysts and consultants and the time taken for a project is offset by the additional investments to upskill and train teams and roping in more senior partners to manage risks associated with AI.
Vivek Prasad, chief commercial officer at PwC India, acknowledged that as AI and other emerging technologies transform business models, clients increasingly expect faster insights, greater flexibility and measurable outcomes.
“However, meaningful adoption of these technologies requires professional services firms to make significant investments in platforms, specialist talent, governance frameworks and continuous workforce training,” Prasad said.
These investments can help clients adapt to emerging technologies faster, manage risks effectively, and unlock sustainable value over the long term, he said.
Over the past few years, consulting and advisory firms have invested heavily in AI, increasingly for research and production tasks. Consulting remains an expensive proposition. Hourly rates range from ₹40,000-50,000 for a junior analyst to several lakhs for senior partners.
Projects for clients were typically handled by on-site junior analysts, with senior leaders checking in periodically. However, given the rising risks of AI, including data privacy breaches and “hallucinations” where bots generate fabricated data, clients are demanding more hands-on involvement from senior experts.
Scope and complexity
Audit and consulting firms such as EY point out that there is no one-size-fits-all approach to pricing. Fees are determined by the “scope, complexity and requirements of each engagement.”
“While AI can support certain routine and administrative tasks, it complements – not replaces – the professional judgement, sector expertise and human oversight that are critical to delivering high-quality services,” said Rohan Sachdev, partner and consulting leader at EY India.
AI has had a major impact in legal, consulting and auditing, areas that require extensive research work for case studies to be presented to clients. The research used to be done by fresh graduates and juniors with a few years of experience, but now companies in these areas have their own AI-based platforms to do the work. The result: scenarios that took weeks to prepare for presenting to clients now take a few hours.
Consulting firm Uniqus Consultech, which works on accounting, risk & compliance, and governance, pointed out that clients want efficiency and accuracy and are willing to accept technology costs in the billed amount.
“As you optimize on the cost of labour and resources, the client must factor in the cost of the technology woven into the process,” said Sandip Khetan, co-founder and global head of accounting & reporting consulting at Uniqus Consultech. “Consulting firms are also putting in more guardrails because of AI. Finally, consulting firms also need to recover the costs of developing AI assets. All these elements add to the costs.”
Discussions are now centred on value-based models. In consulting parlance, value-based models refer to the fee that clients and consultants come up with, depending on the outcome estimation instead of going with a benchmark amount.
“We are seeing conversations on how the AI propositions can derive a differentiated outcome. Value-based models are shaping up across different domains,” said Purushothaman KG, national AI leader and head—technology transformation at KPMG in India.
New markets
The emergence of AI has also widened business prospects for consulting and advisory firms.
“AI has expanded the addressable market for consulting—more firms now need external support to build AI capabilities, so overall project volumes have gone up,” said Siddharth Jain, managing partner and country head, Kearney India. “What’s changing is the shape of teams: fewer analysts per project, more mid-level consultants, because the nature of the work itself has shifted. That shift in team composition, combined with higher volumes, is what’s driving revenue growth for firms like ours.”
Many advisory firms, especially those that also audit like the Big Four—KPMG, EY, Deloitte and PwC—are in tier II and III markets. Demand for work in tax, succession planning in family-run businesses that want to professionalize, mergers and acquisitions, and establishing ERP solutions are pushing partners to take the first flight out to these non-metros and set up offices there.
The growing number of small and medium-scale businesses is driving this shift for top audit firms into Jaipur, Coimbatore, Mysuru, Bhubaneswar, Jamshedpur, Kochi and Chandigarh.
“We are rewiring ourselves with AI as we help our clients do the same,” McKinsey & Company said in an email response to Mint.
Deloitte did not respond to Mint’s queries.