Top Consultancies Freeze Starting Salaries as AI Threatens 'Pyramid' Model (ft.com)
- Reference: 0180250407
- News link: https://tech.slashdot.org/story/25/12/01/1241232/top-consultancies-freeze-starting-salaries-as-ai-threatens-pyramid-model
- Source link: https://www.ft.com/content/2b15601b-8d02-4abe-a789-7862874042be
The industry's classic "pyramid" structure, built on thousands of entry-level employees who crunch data and assemble PowerPoint decks, faces pressure as AI automates much of that work. Two senior executives at Big Four firms estimated that UK graduate recruitment would fall by about half in the coming year. PwC has already cut graduate hiring in 2025 and said in October it would miss a target to add 100,000 employees globally by 2026 -- a goal set five years ago before generative AI's rollout.
[1] https://www.ft.com/content/2b15601b-8d02-4abe-a789-7862874042be
Oh no (Score:1)
Won't someone think of the poor MBAs!
Wow (Score:4, Informative)
This just opened my eyes to just how overeducated a numbskull these people have to be to be so easily replacable by AI.
And they earn THAT much pre graduation?
America sure is a weird and silly place.
Re: Wow (Score:2, Offtopic)
The summary says UK.
Re: (Score:2)
> This just opened my eyes to just how overeducated a numbskull these people have to be to be so easily replacable by AI.
> And they earn THAT much pre graduation?
> America sure is a weird and silly place.
A lot depends on what they do; many of the Big 4 undergrad hires go into Oracle, PeopleSoft, etc. jobs, coding, detailing as built, writing specs, etc.; some of which can be turned over to AI, especially as it gets better. Once you get to the MBB (McK, Bain, BCG) MBA hires it's a lot less that and a lot more problem analysis; some of which can also be done by AI. AI could certainly create a deck using McK's or other firms template, that eliminating a more junior staffer and letting a more senior one edit
Re: (Score:2)
Wow, talk about outing yourself as a moron.
The article was about the UK, not America.
Re: (Score:2)
Nope, one sentence was specifically about the outlook in the UK, but the salaries were mentioned in USD ($) whereas the UK has pounds (£). Other parts of the summary refer to the global outlook. Anyway, I do wonder what kind of pay people take home in various countries in Europe in those roles.
Win-Win-Win! (Score:4, Interesting)
FTFA:
"Some industry executives say that the more conservative hiring practices are in anticipation of productivity gains from AI, not because those gains are necessarily yet being realised."
"Clients are quite legitimately asking, what are you doing?" said Rob Hornby, co-chief executive of the consulting firm AlixPartners. "That's become a new credentialisation, to explain how you are applying AI to your firm."
So my take on this is that it's a win-win, pay fewer people less and then use that savings to attract new clients by showing that AI will cut costs. And the best part and final win? You don't need any actual AI!
Frozen starting salaries, but ... (Score:2)
> Major consulting firms including McKinsey, Boston Consulting Group and Bain have frozen starting salaries for the third consecutive year ...
Have they frozen upper management (their) salaries? (Probably not)
Consultant business model (Score:2)
"I don't know what I'm doing, please suggest something that might or might not improve my company." Sounds like the entire industry is a perfect fit for AI.
And there was much rejoicing! (Score:2)
Quoting Dogbert:
"If you combine 'con' and 'insult', you get 'consult'."
[1]https://www.ianchadwick.com/blog%20pics/2016/dilbert/dogbert_01.jpg [ianchadwick.com]
[1] https://www.ianchadwick.com/blog%20pics/2016/dilbert/dogbert_01.jpg
Frozen at starting salary of $135K? (Score:2)
Nobody in the real world makes that much money right out of college. Maybe the industry was due for a reset.
Re: (Score:2)
Good eye, this is not The Real World. It's the made-up world of finance.
However, it makes sense to pay them well. You have to pay these people a lot or they will steal from you.
Re: (Score:2)
Apparently, it doesn't make as much sense as it used to.
Re: (Score:2)
> Apparently, it doesn't make as much sense as it used to.
It does, but these people don't work on sense. The idea that we live in a meritocracy is a deluded one. They are not at the top of the financial ziggurat because of merit, but because of a lack of it — they will do anything to anyone any time for money.
Re: (Score:2)
Pay has never been a meritocracy, at least, not directly. Like the cost of everything else, pay is a function of supply and demand. If you are a business owner, and you can get the person you're looking for for $X, you're not going to pay $X + $Y to get somebody. And if you're a person with a skill that is in demand, and you can get $X + $Y, you're probably not going to settle for $X. So pay is a negotiation between an employer and an employee, nothing more, nothing less. Merit has nothing to do with it, ot
Re: (Score:1)
The jobs that pay those salaries are typically in cities with a very high cost of living. $135k in London or New York isn’t a bad junior salary but people can do better on a lower salary somewhere else. And many of them do, which is why the pyramid is huge at the bottom.
Re: (Score:2)
According to Salary.com, a "Junior Accountant" in NYC makes an average of $72K. [1]https://www.salary.com/tools/s... [salary.com]
[1] https://www.salary.com/tools/salary-calculator/junior-accountant/new-york-ny
Since when are pyramid schemes a good thing? (Score:2)
I always thought pyramid schemes were scam.
Re: (Score:1)
They still are.
The one who does the least is at the top, who also gets paid the most.
The trend continues as you get lower on the pyramid
Re: (Score:2)
Don't believe everything you hear or see, and especially what you think.