The rise of artificial intelligence is profoundly reshaping the traditional business model of the consulting industry, forcing industry giants to reconsider their talent pyramid structure, which has long been key to their success.

The most direct signal is that top consulting firms, including McKinsey, have frozen starting salaries for graduates for the third consecutive year, as they find that AI enables them to extract greater value from fewer junior employees.

According to Management Consulted, a firm providing interview coaching for students, and sources familiar with hiring offers, employment contracts for 2026 from companies such as McKinsey and Binah Capital Group Inc (BCG) show that graduate compensation will remain at this year's levels. This trend indicates that consulting firms, among the largest recruiters of graduates and MBA students, are adopting a cautious hiring strategy.

"AI implementation within firms has delivered tangible productivity gains," said Namaan Mian, COO of Management Consulted. He added that the ability to derive more value from fewer junior employees "is exerting downward pressure on compensation." He noted, "In professional services and tech, AI-driven disruption is more real than in other sectors of the economy."

The impact of this trend extends far beyond stagnant wages. With AI expected to boost efficiency, consulting firms are scaling back hiring, adjusting talent structures, and sparking debates over the future of the traditional "pyramid" model. This not only affects the career prospects of tens of thousands of top graduates but also signals a potential fundamental shift in the broader knowledge services industry.

**Stagnant Salaries and Hiring Contraction** The consulting industry's sluggish salary growth is already evident. Data from Management Consulted shows that in 2024 and 2025, McKinsey, BCG, and Bain offered U.S. undergraduate graduates total first-year compensation (including salary and bonuses) between $135,000 and $140,000, while MBA graduates earned between $270,000 and $285,000. These figures will remain unchanged in 2026. All three firms declined to comment.

Meanwhile, the "Big Four" accounting firms—Deloitte, EY, KPMG, and PwC—which typically offer lower salaries, have seen starting pay stagnate even longer, with no increases since 2022.

Behind the salary freeze is a contraction in hiring. Marco Amitrano, head of PwC UK, revealed that the firm has cut graduate recruitment for 2025. PwC also stated in October that it would miss its target of adding 100,000 global employees by 2026—a goal set five years ago, well before the rise of generative AI.

Two Big Four executives estimated that graduate hiring at the UK's largest consulting and accounting firms could drop by about half in the coming year. One executive said, "Part of this is commercial, as markets are tougher, but part is also anticipation of AI's impact."

**Strategic Transformation Under AI Disruption** AI is fundamentally altering how consultants work, driving strategic shifts within firms. The technology reduces demand for generalist analysts, whose traditional roles involved data processing and packaging market insights into PowerPoint presentations.

PwC Global Chairman Mohamed Kande told the Financial Times in October that AI has boosted employee productivity. In a later BBC interview, he stated more bluntly that PwC is seeking to hire candidates "from nontraditional backgrounds," including more engineers.

Mian of Management Consulted noted that such reassessments are widespread across consulting firms. As firms pivot from traditional strategy consulting to helping clients implement technology and AI, they are seeking "more mid-career specialists." He explained, "It’s much harder to put a 23-year-old on these projects than someone with experience."

Beyond client services, consulting firms are also aggressively adopting AI internally to boost partner profits and demonstrate potential benefits to skeptical clients. Rob Hornby, co-CEO of AlixPartners, said, "Clients rightly ask, ‘What are you doing?’ Explaining how you apply AI in your own firm has become a new credential."

Accenture reduced its global workforce by over 11,000 to 779,000 in the three months ending August, stating it would cut roles deemed unable to be retrained for AI.

**The Future of the Pyramid Model** The AI-driven transformation is directly challenging the consulting industry’s traditional pyramid structure, where firms hire thousands of juniors and filter talent through an "up-or-out" culture, with only a few reaching the top.

Industry experts predict various new models could replace the pyramid. Some bet on an "obelisk" structure with fewer tiers and less reliance on juniors, while others foresee an "hourglass" model—where middle layers shrink as AI automates routine tasks.

Antonio Alvarez III, Europe head at Alvarez & Marsal, advocates a "box model," where senior staff numbers align more closely with juniors, relying on experienced professionals rather than "a vast pool of junior analysts."

However, Alvarez added, "While we expect AI to enhance analytics and reduce junior labor needs, we also anticipate it will increase overall demand for our services—creating a natural offset."

Meanwhile, some former Big Four partners are launching AI-native boutique consultancies. Mark Bunker, managing partner at startup Queen’s Tower Advisory and ex-Deloitte senior partner, said, "The direction seems to be that as routine work is automated, the pyramid’s base will shrink, but the top’s need for seasoned judgment will become more critical."

**Industry Divisions and Uncertainty** Not all executives believe AI will entirely dismantle the pyramid. Divisions persist within the industry, and the exact path forward remains unclear.

McKinsey North America Chair Eric Kutcher said in September that the firm plans to hire 12% more graduates in 2026 than this year. He argued, "The work we do will still require the same level of intellect, the same speed—you’ll be doing what machines can’t."

AlixPartners’ Hornby takes a more cautious view, suggesting the traditional pyramid may "shrink somewhat," but "new roles will emerge, even at junior levels, focused on managing and curating AI systems."

He concluded, "What the net effect will be, I’m not sure. The exact timing, I’m not sure. In the Industrial and internet revolutions, losses came before gains, with a gap in between. That could happen here too."