The situation is becoming serious.
As technology changes everything in the industry, partnering with AI startups has become a key survival strategy for consulting firms. And for AI startups, consulting firms have become an important channel for distributing their products to enterprises.
The blossoming love between these two industries was evident in a series of recent uproar.
Google announced on Wednesday. was launching a $750 million fund to help consulting firms like McKinsey, Accenture, and Deloitte deploy agent AI to their clients.
McKinsey and Google also created a new working group to help companies identify, build, and scale AI opportunities across their businesses.
Also on Wednesday, the Wall Street Journal reported that OpenAI is working with consulting firms including Accenture, Capgemini and PwC to sell its AI coding assistant, Codex, to businesses.
The rationale is simple. Because AI technology is advancing so fast that Silicon Valley and the consulting industry need each other.
Ben Ellenkwaig, a senior partner at McKinsey who leads alliances, acquisitions and partnerships at Quantum Black, said in an interview with Business Insider. Since launching ChatGPT, the company says it has quadrupled its ecosystem of technology partners.
He added that the depth of the company’s relationships and level of cooperation had “grown dramatically” over the past few years.
He said McKinsey operates an “ecosystem of partnerships and acquisitions” with hundreds of contributors, including major companies such as AWS, Amazon, Nvidia and OpenAI, which it leverages to tailor solutions for its customers.
Despite the flood of new products and AI startups, the company still adheres to a rigorous vetting process, Ellenquig said. “There was a little dating period for us to get to know each other,” he said. “Partnership means a two-way street.”
However, given the pace of the AI boom, the company has recently been more willing to partner with smaller companies, he said.
Former McKinsey consultants told Business Insider that such partnerships also fill the gap in the talent needed to blend raw models from AI labs with the needs of enterprise customers.
These consultants said their role is to take these models to an enterprise level, customize them with data, add appropriate guardrails, and help clients implement the models in their specific contexts. Many of the models emerging from Silicon Valley are not enterprise-ready, consultants say.
According to McKinsey, approximately 40% of its business now comes from generative AI-related projects. BCG said that 20% of its business will be AI-related by 2024.
Andy Triedman, Partner at early stage venture capital firm Theory Ventures With a focus on data and AI, he told Business Insider that tech startups have long relied on consulting firms to help sell their products to enterprise customers, but are now partnering much earlier as pressure to adapt to AI increases.
He said that before ChatGPT, partnerships were typically formed after a startup reached $10 million or more in revenue, or about two to four years, but now partnerships are being formed at the $2 million to $5 million level in just 12 to 18 months of incorporation.
Triedman, a former Bain consultant, said the consulting firm-centered AI ecosystem falls into three main buckets: enterprise software startups that partner with consultants to distribute and implement their products, AI-native consulting firms that compete with traditional companies, and smaller AI tools that automate core consulting operations that could become acquisition targets for larger consulting firms.
“This is a mutually beneficial relationship for both parties,” Triedman said.