How Will Generative AI Affect the Professional Services Industry?

6 min. read

For all of its power, generative AI (AI) is best utilized as a partner to human experts, not a replacement. Market expertise and customer relations are critical skill sets that AI cannot replicate.

Customers invest in people and relationships, not just products. Many professional services require high emotional intelligence (EQ) for success. AI tools cannot replicate the emotional connection and warmth of human interaction, as anyone who has read an article created by ChatGPT can verify.

While not a replacement for individualized expertise, generative AI will impact the Professional Services Industry in a number of critical areas. Many organizations are already reaping the benefits of generative AI, and others are starting to incorporate it into their operations. The generative AI market was estimated to be $43 billion in 2023 and $67 billion in 2024 and is projected to grow to $968 billion by 2032.

Organizations are investing heavily in generative AI because of the economic benefits. Generative AI is expected to add trillions of dollars in value to the global economy, more than the GDP of the United Kingdom. Generative AI is projected to have a huge impact on the professional services sector. A 2024 study by the Thomson Reuters Institute found that 44% of workers in professional services were hopeful or excited about generative AI's impact on their industry, 81% said generative AI had applications in their work, and almost one-quarter said they were already using generative AI or actively planned to start using it.

In this article, we will look at what generative AI is, describe its impact on professional services, focus on four industries in particular, and mention some limitations of generative AI for professional services.

What Is Generative AI?

Generative AI is a type of AI that creates new content, such as text, images, audio, and video. Generative AI analyzes and identifies patterns and structures in existing data to produce new content.

Generative AI is an outgrowth of machine learning, which has existed since at least the late 1970s. Machine learning algorithms focus on identifying patterns in content, like pictures of cats, and then search for new images that match the patterns. Generative AI is a qualitative breakthrough. Instead of correctly identifying an image as a picture of a cat, generative AI can produce new, original cat pictures on request.

How Does Generative AI Impact Professional Services?

Generative AI can do much more than create cat pictures. According to McKinsey & Company, generative AI has the potential to automate workers' activities that currently take up 60% to 70% of their work time. Generative AI's ability to understand natural language means its impact is expected to be greatest on knowledge work with higher salaries and educational requirements.

For example, a report by Deloitte points out that generative AI can create marketing materials like product descriptions, images, and videos much faster and more consistently than current marketing teams and processes. Generative AI can also personalize content based on the customer's geographical region and previous buying behavior.

This means that fewer workers will be needed at the more junior levels since generative AI can perform marketing analyst work faster and cheaper. Consequently, leading talent advisory firms such as ZRG are seeing less hiring at the more junior levels. However, senior consultants and partners are still needed to close the sale.

Here are four industries in which generative AI will have a significant influence.

Accounting/Transaction Services

Accounting is one area that is ripe for automation. It involves many repetitive, detail-oriented, and error-prone tasks. According to KPMG, 65% of leading companies in financial reporting are using AI, and 49% have deployed or prototyped generative AI solutions.

Here are several accounting functions that generative AI is primed to address:

Tax preparation. Tax company Ernst & Young is testing a generative AI system to answer payroll questions for overseas employees. The system can access a complex database of laws and provide answers faster and with greater accuracy than human experts alone. Jeff Wong, EY's global chief innovation officer, says, "We think this has an amazing opportunity to automate a lot of the tasks and job functions that we have around the world, and we expect and plan to use it to the fullest extent of the technology."

Auditing. A study found that auditing firms are using generative AI to prepare administrative documents, research internal accounting, and provide audit guidance. The result is that less manpower is needed in the audit and tax space. Deloitte has created a generative AI chatbot for internal use that acts as a real-time assistant for auditors, providing guidance and answering complex accounting questions.

Financial customer interaction. Generative AI builds on the capabilities of AI tools. Because they understand context and deep meanings, generative AI products can provide a better user experience for both customers and employees.

Strategy Consulting

Generative AI is revolutionizing the consulting industry. Generative AI has the ability to parse vast amounts of data and formulate a plan in minutes. Historically, this type of work has taken even large consultancies months to complete. Prashant Garg, technology consulting partner at EY India, finds generative AI can synthesize large amounts of data rapidly, providing real-time insights that enable consultants to make informed decisions.

Boston Consulting Group has developed two generative AI tools for internal use: enterprise GPT synthesizes large amounts of information to produce summaries in days instead of weeks, and Gene acts as an automated cohost on podcasts, furnishing insights and engaging with human hosts and guests. BCG's consultants have created over 3,000 individual GPTs to create document summaries and perform administrative tasks.

Consulting companies like McKinsey, BCG, and Bain have begun to productize consulting offerings, which is a move in the right direction. However, the full potential of generative AI in this sector is still to be realized.

Software Product Development

Consulting firm KPMG says generative AI has the potential to rewrite how software is built and maintained. The firm says generative AI's impact on software development will be the same as that of the cloud or DevOps.

Developers at many companies are already using generative AI for crucial development tasks like:

• Analyzing the functionality of code they didn't write but must maintain and upgrade
• Simplify code by suggesting alternative approaches that can make future maintenance easier
• Translate code between languages for legacy migration

Generative AI streamlines software development by:

• Enabling organizations to rapidly bring in large teams of developers to implement new features or major software changes. The developers become productive quickly with little guidance needed from existing developers.
• Allow developers to work on a much wider range of platforms, environments, and systems than they could otherwise.
• Codify knowledge so organizations are less dependent on developers of legacy systems.

Development organizations are upgrading systems in as little as 50 days, saving approximately 4,500 development years. Amazon and other well-known companies have let go of thousands of employees and used generative AI to perform their jobs in dramatically smaller periods of time. Companies that leverage delivery  that have previously relied on labor arbitrage will have to adjust their approach.

Outsourcing

Generative AI is also revolutionizing call center and data entry work. Generative AI has the capability to perform these tasks faster and more accurately.

Generative AI assists customer service representatives because it understands customer meaning and intent. Salesforce's Service GPT application can analyze a customer's query and search through various information sources, including the web, product databases, and CRMs, for the answer. Meanwhile, Zendesk has a product that enables a representative to type just a few words in response to a customer question; the product automatically expands the text to a full, natural-sounding response. Sprinklr has an application that records notes from a customer's conversations and answers, allowing representatives to focus on interacting with the customer instead of note-taking.

Takeaway – AI is Revolutionary Technology, but Remains a Partner to Human Expertise

Users of generative AI must continue to be careful to understand its limitations. BCG measured the effect of generative AI on productivity and found that for straightforward, repetitive tasks, the productivity improvement was up to 40% for new hires and 30% for more experienced consultants. However, for more complex tasks, productivity sometimes declined, because consultants had to analyze the outputs of generative AI tools and assess their accuracy.

BCG also found that 90% of consultants improved their performance in creative ideation when using generative AI tools. However, for business problem-solving, consultants who relied on the tools' output saw a 23% decrease in performance. These results show that people still have an advantage in critical thinking and problem-solving, which are crucial to marketing, sales, and product development.

The emergence of generative AI likely means that fewer people will be needed to fill junior-level or analyst roles at large firms. Routine, repetitive, and noncreative tasks will be most impacted by AI. This will move the consulting industry away from hourly billing and towards outcome-based billing, necessitating creative new approaches. On a positive note, generative AI will lower barriers to entry for startups in industries that have previously relied on armies of technical workers, accountants, or software developers.