Professional services have always been built on a simple economic logic: leverage junior labor to expand partner profit. One partner supervises ten or more juniors. Those juniors do the analysis. Partners sell the output. Margins flow from the spread between billable hours and salaries. This is the pyramid.
AI is destroying it.
The pyramid is not being disrupted from the top. Partners remain valuable. It is not being disrupted from the bottom. Junior roles still matter, but fewer of them are needed. Instead, AI is compressing the middle, hollowing out the traditional structure, and forcing firms into one of three new organizational shapes: the Obelisk, the Hourglass, or the Box.
Understanding this compression requires understanding the mechanics driving it. The firms that navigate this transition deliberately will gain disproportionate advantage, while those clinging to the classic model will face structural decline. The pyramid era is ending, replaced by a new architecture defined by automation, specialization, and outcome-based economics.
The old model depends on junior headcount. But AI now performs large swaths of junior-level work at near-zero marginal cost. Research synthesis, data cleaning, slide drafting, process mapping, financial modeling—tasks once spread across armies of analysts—are collapsing into automated workflows. When junior arbitrage disappears, the pyramid loses its foundation.
Specialization Shift
AI penalizes generalists. The market begins rewarding I-shaped experts—professionals with deep vertical expertise and the ability to orchestrate AI systems. The broad T-shaped generalist, once the crown jewel of consulting, becomes less valuable as AI handles horizontal capability. Human value shifts to judgment, interpretation, domain depth, and trust.
The Anticipation Economy
AI shifts value forward. Firms cut junior hiring today in anticipation of tomorrow’s AI-driven efficiency. Even before full automation arrives, the expectation of automation depresses demand. This explains the contraction in early-career roles long before AI reaches peak capability.
The Credentialization Flip
Consulting once had a premium signal: the “smartest MBAs,” the most articulate generalists. But as AI encodes generalist knowledge, the differentiator becomes “AI sophistication”—the ability to operate, supervise, and architect AI systems. A new credential environment emerges: less Harvard MBA, more deep specialist with AI fluency.
These mechanics force structural redesign. Firms must choose their new architecture, whether explicitly or by inertia.
2. Model 1: The Obelisk
Few layers, narrow base, senior-heavy
This model compresses junior layers by 50–70 percent. AI curators and operators replace much of the entry-level workforce. The classic partner-principal-manager-associate-analyst ladder flattens into three layers: partners, specialists, and AI curators.
The Obelisk model is the natural evolution for large auditing and implementation firms—the Big Four. Their work is process-heavy, compliance-driven, and highly automatable. They stand to gain immediate margin by reducing junior dependence and scaling with AI.
But this model comes with a risk: fewer juniors means a weakened future talent pipeline. The firm becomes dependent on lateral hires and external specialists. Still, in the near-term, the Obelisk offers efficiency, predictability, and clear partner economics.
3. Model 2: The Hourglass
Hollow middle, missing rung problem
The Hourglass retains senior teams and junior teams but compresses the middle ranks—managers and engagement leaders. AI takes over project coordination, draft deliverables, and mid-level synthesis, creating a structure where partners and specialists operate at the top, while associates and AI operators fill the bottom. The middle shrinks dramatically.
McKinsey is already signaling this direction with increased hiring of grads but reduced mid-career intake. This model offers agility: strong expertise at the top, affordable AI-supervised execution at the bottom.
The strategic vulnerability is the missing rung problem. Without a robust middle layer, firms struggle to grow future partners. The culture fragments. Risk management becomes harder. Institutional knowledge has fewer custodians.
Still, the Hourglass is likely the default model for global strategy firms.
4. Model 3: The Box
Balanced layers, outcome-based billing
Boutique firms and AI-native consultancies are converging on a Box structure: senior experts, AI operators, and junior support with a near 1:1 ratio. Billing shifts from hourly to outcome-based. Clients pay for results—not time—and AI automation expands the number of results a small team can deliver.
This model scales horizontally, not vertically. It fits firms that compete on specialization, not headcount. The Box model also aligns naturally with AI workflows: small teams, rapid iteration, deep expertise, AI automation, and productized services.
The risk is ceiling height. The Box model struggles to expand into enterprise-scale multibillion-dollar engagements. But for 80 percent of the consulting market, it is the most efficient shape.
5. The Barbelled Distribution
Across all models, the talent market is splitting:
Top: Partners and deep specialists—thriving, in high demand, price-increasing.
Middle: Generalist managers—compressed, facing reduced hiring and lower leverage.
Bottom: AI operators, technologists, and domain technicians—growing, increasingly essential.
This barbell reshapes compensation. For the first time in decades, salaries for early-career consultants are flat, reflecting an oversupply of generalist talent and an undersupply of AI-literate specialists.
6. The Market Signal
The three-year salary freeze around $135K–$140K for early-career consultants signals structural change—not cyclical turbulence. Firms are not pausing compensation because of temporary demand dips. They are redesigning the pyramid. The freeze is a strategic realignment with AI-driven economics.
It is a message to the market: the entry-level role of the past no longer exists.
7. The Competitive Advantage
The firms that understand pyramid compression early will earn disproportionate returns. Those that adapt late will face margin decay, talent shortages, and competitive irrelevance.
The winners will:
Replace labor arbitrage with AI arbitrage
Redesign their talent architecture
Build specialized capability at the top
Build AI-native operational systems at the bottom
Shift from billable hours to outcome-based pricing
Develop new credentials and talent pipelines
The consulting model is not dying. It is transforming into its AI-native form.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
