When discussions about artificial intelligence (AI) arise, the focus often shifts to the jobs that this technology is poised to replace first. Since the emergence of ChatGPT marked the onset of the current AI revolution, many workers are eager to understand how AI will affect their industries. Experts suggest that roles involving repetitive tasks, such as customer service, telemarketing, and data entry, are likely to be among the first to be fully automated.
Even before the rise of chatbots, many retail chains began removing cashier positions by implementing self-checkout systems. However, recent reports indicate that not only low-skilled and low-salary positions are at risk of being replaced by AI.
A significant transformation may be occurring in a powerful industry known for providing high-paying jobs, potentially spearheaded by Elon Musk.
Since Musk took over as head of the newly formed U.S. Department of Government Efficiency (DOGE), he has concentrated more on reducing federal spending than managing Tesla, SpaceX, or his other companies. His team at DOGE has actively pursued the dismissal of government employees and has sought to encourage others to resign.
Experts are divided on whether Musk’s application of the Silicon Valley “move fast and break things” strategy will yield positive outcomes for the federal government. Nevertheless, it appears that his current role may lead to further job eliminations in the private sector.
For decades, prominent consulting firms have profited from lucrative government contracts, including industry giants such as McKinsey, Deloitte, and Booz Allen Hamilton. Now, there is speculation that Musk’s team at DOGE may reduce federal spending on consulting firms significantly. Data from The Economist suggests this reduction could greatly impact firms like Booz Allen Hamilton and Accenture, which have historically benefited from public sector contracts.
The report implies that Musk might decide that consulting firms, having long attempted to resolve government issues, are not adequately fulfilling their roles and are therefore not a wise use of federal resources. Consequently, Musk may prefer redirecting efforts toward companies from his sphere of influence.
Palantir Technologies, a data analytics company that has established a profitable niche as a defense contractor, could potentially benefit. Musk recently appointed Palantir’s former Head of Intelligence & Investigations to a top position within the U.S. Office of Management and Budget.
According to The Economist, unlike many other software providers, Palantir integrates teams of engineers with clients to optimize technology use. Although Palantir currently collaborates on projects with firms like Accenture and Deloitte, some see it as a potential competitor to major consultancies, especially in the AI domain.
Peter Thiel, a founder of Palantir and former colleague of Musk, has criticized the consulting industry, referring to McKinsey as a “total racket.” Musk might share similar views, as his appointees have discussed the importance of implementing an “AI-first strategy” in government offices.
Musk’s focus on reducing excessive federal spending and replacing workers with technology suggests that he might decrease the federal budget for consulting services significantly. The extent of these cuts and the possibility of completely eliminating consulting services remain questions.
To explore how AI might help reduce the reliance on consultants, TheStreet interviewed Yersultan Sapar, a former Apple engineer and now co-founder and CTO of Perceptis AI, a workflow automation startup. An expert in AI and consulting, Sapar predicts that while AI will continue to transform the industry, it may not necessarily be detrimental to human consultants.
Sapar asserts that the consulting industry’s future is leaning towards greater fragmentation and specialization. While McKinsey, Accenture, and Deloitte will continue to be key players, much of the industry’s growth will come from smaller, specialized firms.
This evolution could provide opportunities for companies like Palantir at the expense of traditional consulting firms. However, Sapar also notes that if consulting firms successfully incorporate AI into their operations, they could achieve superior results.
He believes that combining human consultants with AI could outperform either alone, allowing consulting firms time to adapt and integrate AI into their services. Although AI presents a long-term challenge to traditional consulting, the best defense is to embrace and incorporate AI technology.