For many graduates, landing a prestigious job at one of the big consulting firms would be a dream role.
But Ikum Kandola decided after five years at PwC as a cyber consultant and generative AI researcher to set out on his own in 2024.
He started his own consultancy called TheAX. Its AI software for small and medium-sized consultancies automates common consulting tasks such as collecting data — for example, surveying employees at a client — analysing the data and formatting it into a report.
“I felt I had more to offer . . . and really wanted the flexibility to make autonomous decisions . . . the upside of founding a company was essentially unlimited,” he says, adding that he found some of the internal processes at PwC challenging, especially around getting approval for any new AI use. “I was really frustrated at PwC with the amount of red tape when we wanted to use a new AI technology.”
Kandola is among a number of consultants who have left big firms to create AI-based start-ups that make software for consultancies and their clients.
PwC, one of the Big Four firms alongside Deloitte, EY, and KPMG, declined to respond to Kandola’s comments. Umang Paw, PwC UK’s chief technology officer, says the company works with large and “emerging” software providers to find the right AI tools for its consultants, as well as building its own AI technology.
The UK’s AI consulting sector has grown quickly, with annual spending on its services growing 22 per cent from 2023 to £744mn last year, far outpacing the 2 per cent growth for the entire UK consulting sector, according to sector analyst Source Global Research. In the next two years, AI consulting revenues in the UK are forecast to rise another 33 per cent, compared with just 11 per cent growth for the UK consulting sector.
The big consultancies have cut thousands of jobs in the past few years, reflecting the slower growth across the industry since the pandemic. Source Global Research chief executive Fiona Czerniawska says the firms are under pressure to become more efficient because of lower margins and rising costs, including salary inflation.
Czerniawska says AI tools can save consultancies time and money by automating common and repeatable tasks, such as analysing large amounts of data and market research. If, for instance, a consultancy can use AI to complete an analysis task in five days that would previously have taken five weeks, the project “gets much more profitable”, she says.
“The main commercial driver [for consultants using AI] is they can save time and money because the two things are the same,” she says.
Grasp is another AI start-up specialising in consulting software that was founded by former management consultants. Its software automates company and market research tasks for more than 200 customers in management consulting, investment banking and private equity.
Grasp co-founder Richard Karlsson: ‘Market analysis, valuation, or diligence, can be produced almost instantly by AI systems’
The platform, which includes publicly available financial, business and social media data on about 100mn predominantly private companies, uses AI technology from suppliers including Anthropic, OpenAI and Google. Grasp also builds its own AI models.
Grasp says that at one customer — a Big Four accounting firm — consultants each saved an estimated 15 hours per week by using Grasp’s subscription-based, chat-style “agent AI”, a type of AI that can perform tasks autonomously.
The consultants used the technology for client research, including analysing market data to create a shortlist of possible companies that could be bought or sold, based on revenue parameters and whether it was a “distressed asset”. The AI summarised the data in slide presentations and spreadsheets. Consultants reviewed the data and made their own recommendations to the client.
“Market analysis, valuation, or diligence, can be produced almost instantly by AI systems, with limited human involvement focused on review, judgment, and client interaction,” says Richard Karlsson, Grasp co-founder and chief executive and a former McKinsey consultant.
The latest consulting software can also help small consultancies win larger contracts.
Jonny Cooper’s Consultants in Business used TheAX’s software to conduct a survey for Gibraltar’s government and turn lengthy responses into a report
Consultants in Business, a small firm based in Gibraltar, used TheAX’s software to conduct an anonymised survey of more than 4,000 public sector workers for the government of Gibraltar and turn multiple-choice and lengthy responses into a report.
“This would not have been feasible even using traditional digital tools, as it would have taken weeks to sift through all the submissions, let alone generate any kind of useful summary or conclusions from them,” says CIB founder Jonny Cooper.
Should large consulting firms be worried about increased competition from former employees?
Kate Smaje, McKinsey’s global leader for technology and AI and a senior partner, says: “We train consultants to be . . . business and technology leaders, so it’s not surprising that some alumni go on to found, scale and run tech and AI-driven companies.
“We don’t see this as a problem, but as a reflection of the strength of our tech talent development.”
McKinsey and other large consultancies are taking a multipronged approach to AI, either building their own tools, buying them from start-ups and large tech companies, or acquiring smaller AI companies — as Bain did in 2024 with its purchase of PiperLab.
UK’s leading management consultants
This article is part of the UK’s leading management consultants Special Report.
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EY chief technology officer for UK and Ireland Preetham Peddanagari says the fact that AI start-ups have started “productising” consulting tasks that were previously done manually is a “positive sign the market continues to mature”.
KPMG UK says about one-fifth of the AI technology it uses for “advisory” work, which includes consulting, is supplied by AI start-ups.
As the market for consultancy technology matures, it will probably consolidate, according to one expert.
Czerniawska of Source Global Research predicts that large consultancies will probably start to “spend quite a lot of money buying small, innovative firms that have developed these [consultancy software] platforms . . . plugging them into their consulting process”.
Yet consultants-turned start-up founders seem in no rush to return to traditional consulting.
“[There] is . . . [a] tail wind in the AI sector right now,” says Grasp’s Karlsson. “And to be part of that . . . it’s indescribable . . . how fun it is.”