Kevin O'Leary says startups are replacing consultants with AI

Artificial intelligence is beginning to replace work traditionally performed by management consultants, according to investor and entrepreneur Kevin O'Leary, who says many companies are now turning to AI tools before hiring outside advisers.

Speaking on the Harvard Business School Foundry podcast, O'Leary said startups and businesses in his investment portfolio increasingly rely on AI to analyze business problems that would previously have been outsourced to consulting firms.

"Companies that used to use a lot of consultants are first going to AI," O'Leary said, noting that AI can often provide recommendations at a fraction of the cost of traditional advisory services.

According to O'Leary, management teams are using AI-generated insights to evaluate strategic decisions ranging from distribution models to operational improvements, reducing the need for external consulting engagements.

He said the shift has accelerated rapidly over the past two years as generative AI tools have become more capable and accessible.

The comments add to growing debate over how AI will reshape professional services industries, including consulting, legal services and accounting, where much of the work involves research, analysis and recommendations.

Consulting firms are already adapting to the trend.

Many of the industry's largest players have invested heavily in AI capabilities, positioning themselves as advisers on AI adoption while also using the technology internally to improve productivity.

Boston Consulting Group has said AI- and technology-related services now account for more than 40% of its revenue, reflecting strong enterprise demand for AI transformation projects.

Meanwhile, McKinsey & Company has deployed its internal generative AI platform, Lilly, across much of its workforce, while Accenture has been restructuring its workforce and increasing investments in AI-related services.

For enterprises, the trend suggests AI is beginning to move beyond productivity tools and into areas traditionally reserved for high-value knowledge work.

Rather than eliminating consultants entirely, AI is increasingly handling research, scenario analysis and recommendation generation, allowing internal teams to make decisions with less dependence on outside expertise.

O'Leary, however, argued that the disruption could have broader implications for consulting careers.

While he sees value in consulting as an early-career training ground, he questioned the long-term career prospects of professionals who spend many years in the industry without gaining direct operating experience.

According to O'Leary, consulting can help professionals understand different industries and business models, but he believes future business leaders need hands-on experience running organizations rather than advising them.

His comments reflect a growing sentiment among investors and executives that AI is changing the economics of knowledge work, forcing professional services firms to redefine their value proposition.

As enterprises increasingly deploy AI for research, planning and decision support, the competitive advantage may shift from gathering information to applying judgment, industry expertise and execution capabilities—areas where human experience remains difficult to replicate.

For consulting firms, the challenge will be demonstrating that they offer more than insights that AI can generate, as clients increasingly evaluate whether advisory work can be performed faster and more cheaply with AI tools.