If you’ve hired outside help for a digital transformation project in the last few years, you know the pattern: a proposal with a big team roster, a multi-month timeline, and a rate card built around headcount. That model is now visibly cracking — inside the very firms that invented it. In the past two weeks, KPMG’s UK advisory arm confirmed a fresh round of job cuts hitting its AI, cyber, data, and technology teams, its second such reduction in six months. At the same time, trade press has been documenting a blunter version of the same story: the AI these firms sell to clients is starting to eat the labor-intensive business model they sell it with. For any business owner currently choosing — or re-negotiating with — an IT consulting or digital transformation partner, that shift changes what a good deal looks like.

The Irony at the Heart of the AI Boom

KPMG UK is cutting roughly 200 positions, about 4% of its advisory workforce, concentrated in AI, cybersecurity, SAP, and testing teams, with departures expected in October. It’s the second wave in six months — the firm eliminated around 600 UK roles in February, on top of a broader multi-year slide in advisory headcount from pandemic-era peaks. Management’s public explanation is that the firm is “adapting where we are focusing and how we are set up” to match evolving client demand. Coverage of the cuts has also pointed to subdued market demand and a mid-single-digit percentage decline in consulting revenue, a pattern echoed at other large advisory firms over the past year.

The detail that stands out isn’t the headcount number — it’s which teams got hit. These weren’t back-office cuts. They were the AI and technology practices that firms like KPMG have spent the last two years marketing as their growth engine. That’s the irony business leaders should sit with: the same technology these firms are paid to help clients adopt is now reshaping how many people it takes to deliver that advice in the first place.

Consulting’s Old Math No Longer Adds Up

A widely discussed piece in CIO magazine, published earlier this month, laid out why this is happening industry-wide rather than at one firm. AI tools are compressing research and analysis work that used to take teams of consultants weeks to produce down to hours, which undercuts the traditional value proposition of large advisory engagements built around staffing volume. As one consulting-firm founder quoted in the piece put it, the value in an engagement is moving “away from the volume of people assigned… and toward judgment, architecture, implementation, governance.” A technology executive interviewed for the same article was more direct: AI “commoditizes exactly what consultants charge a premium for, which is synthesizing data and translating insights into recommendations.”

That’s already changing how engagements get structured. Buyers are reportedly pushing for shorter, more modular projects — ninety-day sprints rather than multi-year contracts — because AI has made it faster to test whether an approach actually works before committing a full team and budget to it. Not everyone agrees this fully guts the traditional model; one consultant quoted in the same coverage cautioned that AI accelerates the analysis but “doesn’t make the transformation itself happen faster. People still have to make decisions, change processes, implement technology.” Both things can be true: the thinking work is getting cheaper and faster, while the organizational work of actually changing how a company operates still takes time, discipline, and people who understand your business.

What “Right-Sizing” Really Signals

Large advisory firms rarely cut the teams they think are about to become more valuable. When AI and technology practices are the ones absorbing headcount reductions, it’s a signal that the economics of selling advice by the person-hour are under real pressure — not just at KPMG, but across the segment of the industry built on that model. For a business owner, that’s useful information going into any conversation with a prospective technology or transformation partner: pricing built primarily around staffing a large team for a long time is increasingly a legacy structure, not a reflection of how much value the work actually delivers.

What This Means If You’re Choosing an IT or Transformation Partner

Before signing on with any consulting or software partner for a digital transformation initiative, it’s worth asking a few direct questions:

• How is this engagement priced — by headcount and duration, or by outcomes and milestones? A partner still selling you a large team on a long clock, with no modular checkpoints, may be pricing for their old model rather than what the work actually requires now.
• Where specifically is AI being used in your own delivery process, and where is a human still making the call? Vague answers here are a warning sign; specific answers about which decisions stay with experienced people (architecture, governance, change management) versus which are AI-assisted (research, drafting, first-pass analysis) are a good sign.
• What does a ninety-day version of this project look like? If a partner can’t describe a smaller, faster first phase that proves the approach before you commit to the full scope, that’s worth pressing on.

None of this means large advisory firms are going away, or that experienced consultants aren’t worth paying for. It means the basis for that payment is shifting from “how many people did you put on it” to “how good was the judgment, and how fast did we get to something working.” That’s a better deal for buyers who know to ask for it.

The takeaway for any business owner planning a technology or transformation initiative this year: use this moment of industry disruption to your advantage. Partners who are already restructuring around smaller, judgment-led teams and modular delivery are likely to be more honest about timelines, more flexible on scope, and better aligned with how fast AI-assisted work can now actually move — if you know to ask the right questions up front.

If you’re weighing whether your current technology roadmap still matches how fast this work can move, we’re happy to talk it through. Reach out to info@kodevox.com or visit our contact page to start the conversation.

Sources and further reading:

• IT consulting has a big AI problem — CIO
• KPMG tech cuts come with a severance sum some staff call insulting — The Register
• KPMG UK to cut another 200 jobs, including roles working on AI — The Irish Times

— The Kode Vox Team