Clients are starting to ask consulting firms a thorny question: If AI is doing more work, why are we still paying the same price?
It’s an issue that runs deep inside Amazon’s cloud business, through a consulting arm called ProServ, which impacts more than $10 billion in Amazon’s annual revenue.
Major customers such as Booking.com and Danske Bank are “aggressively” seeking to renegotiate their ProServe contracts, demanding what Amazon’s internal documents describe as “AI-powered pricing” and faster results at lower costs.
The June document summarizes the prevailing sentiment among ProServe customers: “If GenAI enhances or speeds things up, you should get more value faster and not pay the same price.”
This pressure is causing the ProServe unit to change shape. Internal documents reviewed by Business Insider show that Amazon is restructuring its cloud consulting division around AI agents, which the company calls “digital employees,” moving away from the traditional billable hour model.
This shift reflects broader ripples across the consulting industry. The twin forces of pricing pressure and automation are pushing other consulting firms in a similar direction, accelerating the shift to performance-based pricing, where companies charge based on results rather than time-based human labor.
ProServe’s document warns that “our customers’ purchasing patterns are changing in favor of agile, outcome-based, AL-driven engagements with faster time to value and clear ROI, creating significant revenue and workload concentration risks in our top revenue cohorts.”
AI is challenging the billable hour model
Consulting has long operated on a simple equation: revenue increases or decreases depending on the number of employees and hours worked. Projects are often priced by the hour, and a team of engineers, architects, and project managers are assigned to work with the client.
But now, generative AI tools are accelerating coding, documentation, and software modernization efforts. Tasks that once required teams of consultants can increasingly be automated.
Clients expect lower costs if work is completed faster and with fewer people.
ProServe planning documents for June and November acknowledge this dynamic, pointing to customer demand for efficiencies and lower effective prices driven by AI.
The June document outlined a “fundamental” strategic shift “from traditional project-based consulting to product-led, outcome-based delivery.” ProServe aims to structure up to 75% of its projects as “fixed price” deals by this year, the document states.
AWS is not alone in facing this change.
Leading consulting firms such as Accenture and Deloitte are making major AI investments and are increasingly emphasizing outcome-based pricing in customer engagement. Executives across the industry have suggested that generative AI will compress traditional labor-based jobs while forcing companies to compete more for tangible results. For example, the Financial Times recently reported that auditing giant KPMG has demanded lower fees for its auditors due to improved AI efficiency.
Building a “digital workforce”
To support this change, ProServe is formalizing an approach to deploying AI agents, according to the document.
ProServe outlined plans to establish an “Agent AI” team and deploy an “Agent Operating Model” to manage autonomous software that can perform actions with minimal human intervention.
ProServe described AI agents as a “digital workforce that complements human teams,” and proposed creating an AI agent service and marketplace to manage and deploy AI agents, according to the document.
One of the June documents predicts significant productivity gains, including automation of up to 90% of certain tasks.
“This positions AWS as a leader in building and managing AI agents as a new category of digital workforce,” the June document said.
Amazon adapts
An Amazon spokesperson told Business Insider that ProServe recognized early on that “agent AI innovation” was driving change in the consulting industry and moved quickly to adapt its business model. Customers are demanding fixed, performance-based pricing, and AWS has responded by rolling out services designed to deliver greater value and measurable results, the spokesperson added.
“This AI-powered consulting model accelerates business transformation for our clients, enabling innovation that delivers more value in less time and at lower cost,” the spokesperson said.
Amazon shared some of its plans for an “agent-first consulting approach” in a November blog post.
Other companies are following suit. McKinsey CEO Bob Sternfels recently said the consulting firm has added 25,000 AI agents to its staff in less than two years. PwC, EY, and Boston Consulting Group are also focusing on bringing AI agents in-house.
Consulting as a cloud growth engine
The stakes are high for Amazon Web Services, the world’s largest cloud provider, which relies on ProServe to acquire and retain customers.
ProServe’s consulting work could help AWS generate approximately $12.5 billion in AWS revenue in 2024, according to a June planning document. The department’s public sector operations alone were projected to generate more than $500 million last year, according to a November document. The June document said it wants to help AWS become a $500 billion company within 10 years, up from $129 billion last year.
ProServe is already seeing efficiency gains from AI, according to documents from last year. The division is on track to post positive operating margins for the first time last year, and aims to increase revenue per employee by 20% year-over-year in 2026 by expanding its use of AI tools. We also expect to be able to further accelerate AI adoption among AWS customers without significantly increasing our headcount.
Despite increased profitability, ProServe salespeople are facing a pay structure overhaul. Starting this year, hundreds of sales employees transitioned to a more variable compensation model, according to people familiar with the transition. The new plan reduces guaranteed stock compensation and ties the majority of compensation to performance-based incentives, bringing ProServe in line with the pay model used across other AWS sales roles.
“Enabling AWS to grow while maintaining a profitable business is our North Star and will guide our bold transformation into 2026,” the June document said.
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