AI enables "fewer junior employees to extract greater value"! Consulting giants like McKinsey "freeze starting salaries for the third consecutive year"

The rise of artificial intelligence is profoundly reshaping the traditional business model of the consulting industry, forcing industry giants to reassess the talent pyramid structure that underlies their success.

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

According to Management Consulted, an organization that provides interview coaching for students, and individuals familiar with related offers, employment contracts for 2026 issued by companies including McKinsey and Boston Consulting Group (BCG) indicate that graduate salary levels will remain the same as this year. This suggests that consulting firms, among the largest recruiters of graduates and MBA students, are taking a cautious approach to hiring.

“The implementation of AI internally has led to real productivity improvements,” said Namaan Mian, Chief Operating Officer of Management Consulted. He added that the ability to “extract more value from fewer junior staff is exerting downward pressure on salaries.” He believes, “the disruption caused by AI in professional services and technology is more tangible than in other sectors of the economy.”

The impact of this trend goes far beyond stagnant pay. With expectations that AI will increase efficiency, consulting firms are reducing hiring, adjusting their talent structure, and sparking debate over the future of the industry’s traditional ‘pyramid’ model. This not only affects the career prospects of tens of thousands of top graduates, but also suggests that the future landscape of the entire knowledge services sector may change fundamentally.

Salary Stagnation and Shrinking Recruitment

The trend of sluggish salary growth in the consulting industry is apparent. Data from Management Consulted shows that in 2024 and 2025, McKinsey, BCG, and Bain in the U.S. offered a first-year compensation package (including salary and bonus) for undergraduates totaling $135,000 to $140,000, while for MBA graduates, compensation was $270,000 to $285,000. Salaries will remain at these levels in 2026. All three companies declined to comment.

Meanwhile, the “Big Four” accounting firms—Deloitte, EY, KPMG, and PwC—with typically lower starting pay, have seen their pay levels stagnate for even longer, with no increase since 2022.

Behind frozen salaries is a reduction in recruitment scale. PwC UK head Marco Amitrano stated the firm has cut graduate hiring for 2025. In October, PwC further said it would not meet its goal of increasing global staff by 100,000 before 2026—a target set five years ago, long before the widespread use of generative AI.

Two executives at Big Four firms estimate that over the next year, graduate recruitment at the largest consulting and accounting firms in the UK will fall by about half. One executive said: “Partly it’s commercial, as the market is tougher, but partly it’s also because of the anticipated impact of AI.”

Strategic Transformation under the Impact of AI

AI technology is fundamentally changing the way consultants work, driving strategic transformation within firms. AI has reduced the demand for generalist analysts, whose traditional job is to process data and turn market insights and strategic advice into PowerPoint presentations.

PwC’s global chairman Mohamed Kande told the Financial Times last October that AI has boosted employee productivity. In a BBC interview last month, he was even more direct: PwC is seeking to hire candidates “with backgrounds different from traditional ones,” including more engineers.

Mian of Management Consulted noted this reflection is common in many consulting firms. As companies pivot focus from traditional strategy consulting to helping businesses implement technology and AI, they are seeking “more specialists with mid-career experience.” He explained: “It’s far harder to involve a 23-year-old in such projects than to have someone experienced do it.”

In addition to adjusting client services, consulting firms are actively promoting AI internally to boost partner profits and demonstrate its potential benefit to skeptical clients. Rob Hornby, co-CEO of consulting firm AlixPartners, said: “Clients naturally ask, ‘What are you doing?’ Explaining how you are applying AI in your own company has become a new credential.”

Accenture, in the three months ending in August, reduced its global headcount by more than 11,000 to 779,000, and said it would cut employees it thought could not be retrained to use AI.

The Future of the Pyramid Model

This AI-driven change is directly challenging the consulting industry’s traditional “pyramid” structure. In this model, firms hire thousands of junior staff, screen talent through an “up or out” culture, and only a few reach the top.

Industry experts have predicted several models that might replace the pyramid. Some bet on an “obelisk” structure, with fewer layers and less reliance on junior staff; others predict a “hourglass” model—since AI automates routine middle-level tasks, leading to a shrinkage of mid-level tiers.

Antonio Alvarez III, European head of consulting firm Alvarez & Marsal, advocates a “box model,” where senior staff numbers are much closer to junior staff, because it depends more on experienced professionals than “huge groups of junior analysts.”

However, Alvarez added: “While we expect AI to enhance analytical capabilities and reduce the need for junior labor, we also anticipate AI will increase overall demand for our services—which provides a natural offset.”

Meanwhile, some former Big Four partners are founding boutique consulting firms native to AI. Mark Bunker, managing partner of startup Queen’s Tower Advisory and former senior partner at Deloitte, said: “The direction seems to be that as routine work is automated, the bottom of the pyramid contracts, but demand for experienced judgment at the top becomes even more vital.”

Industry Divergence and Uncertainty

However, not all executives believe AI will completely overturn the pyramid structure. There is division within the industry, and the exact path forward remains uncertain.

Eric Kutcher, McKinsey’s North America chair, said in September that the company’s graduate hiring in 2026 will be 12% greater than this year. He stated: “The work we do will still require the same level of intellect, the same speed, and you’ll be doing things that machines simply can’t do.”

AlixPartners’ Rob Hornby takes a more cautious view, believing that while the traditional pyramid may “shrink,” “there will be new roles created, including at the junior level, focused on managing and planning for AI systems.”

He concluded: “What the ultimate net effect will be, I don’t know. The exact timing, I don’t know either. In the industrial and internet revolutions, there were losses first then gains, and a gap in between. That may happen again.”

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