The Ivory Tower Rethought

GenAI Disruption in White Collar Strongholds

At this point, GenAI is so part of the zeitgeist that it is rare to have a conversation about Professional Services that does not touch on it. From management teams to interested PE funds, everyone wants to know will AI be friend or foe and how can businesses best go about harnessing its power or mitigating its effects.

Some Professional Services’ businesses have been complacent in the face of GenAI assuming that the complexity of their work and value of their proprietary insights, combined with concerns around data security, would insulate them from change. The speed of GenAI’s development, the increasing accessibility of ring-fenced LLMs and the well-publicised benefits that companies using GenAI have unlocked are beginning to undercut these defences forcing all of the Professional Services sector to face up to the reality of the AI revolution.

Where and How will GenAI Impact Professional Services’ Workflows?

The foot-dragging of Professional Services’ businesses is matched by the AI “bullishness” of a minority of PE firms who are convinced that GenAI is going to completely upend the market and render the people-first Professional Services’ model redundant. Whilst it is hard to identify a Professional Services’ firm that will not be touched by GenAI, it is likely to be the small minority of cases where GenAI completely replaces the human element (e.g. restaurant review translation). In the majority of cases, the winning model is likely to be a combination of AI and people. What that combination looks like will be far from uniform across the Professional Services’ universe with the nature of the impact driven in large part by ability to automate workflow and perceived cost of failure.

The former barrier is constantly being eroded by technological advancement, by contrast, the latter is likely to prove sturdier as inherent risk aversion sets the bar for new solutions far higher than is rational. Driverless cars are estimated to be 6.7 times safer than cars driven by humans and yet we are still likely years away from fully driverless vehicles being a common sight on the highway. Similarly, a 2022 study by the Public Company Accounting Oversight Board found that 40% of all public company audits in the US contained errors – yet people still say GenAI must demonstrate that it is error-free before it can be deployed on a new accounting use case.

So What for Professional Services’ Firms?

Useful frameworks aside, meaningfully determining the impact of GenAI on a Professional Services firm must be done on a case-by-case basis. Moreover, identifying the impact is only the beginning as it leaves businesses facing the not insignificant question of what to do about it?

Whilst a lot of ink has been spilled tackling the impact of GenAI and debating the automatability or not of different tasks, less has been written on the commercial implications of this impact and how Professional Services should look to respond. This report seeks to remedy this imbalance by covering three key questions for Professional Services’ firms looking to develop their response to GenAI:

1. What is the nature of the competitive threat I face, and how can I create a sustainable competitive advantage?
2. Even if I can be front footed on GenAI, what are the implications for my business commercially and financially?
3. What is the right speed of adoption for me? Should I leave others to lead the way and act as a fast follower? What are the risks and rewards of doing so?

Now is the time for businesses to be asking themselves these questions and putting their plans in place. The nascency of GenAI and the confusion it continues to cause creates a short but critical window of opportunity for Professional Services’ firms to take action. If they miss that opportunity, well, there may not be driverless cars on the road but there are not many horse traders left in Detroit either.

For our insights into GenAI’s potential impacts on Professional Services, see our latest report. If you would like to discuss any of the topics covered in this report, please contact: Fred Ward or Chessy Whalen. For further information on our services, email [email protected].