"Skin in the Game" Is the Consulting Industry's Last Exit

"Skin in the game" is the phrase consulting firms now use to sell their new pricing. It is meant to sound like confidence — the advisor finally putting something of its own at risk. It is closer to the opposite: the only exit left. The mechanism is simple enough that one line names it. Avaneesh Marwaha, the chief executive of the legal-software firm Litera, put it plainly.

The AI model is becoming a commodity. — Avaneesh Marwaha

When AI can do the work, you cannot bill for the hours that work used to take. What killed the billable hour was not a pricing decision but a production one. The analysis, research, and drafting that junior consultants billed days for is exactly the work AI now does in seconds ^[1]. The pyramid that sustained the model has been dismantled from the bottom: entry-level hiring is down 54%, McKinsey's headcount has dropped 11%, and Bain shed roughly 1,000 people between 2022 and 2024 ^[2]. A model that charges for the hours of people who are no longer being hired cannot stand. So the industry is now moving to outcome-based pricing because AI has made the billable hour "obsolete" and fixed-fee arrangements fail to show clear return on investment — consultants must take on financial risk ^[3]. This is not a value-add. It is a pricing model of last resort: when the process is cheap, you can only charge for the result. And the result is a bet on the very tools that made the process cheap. The track record is not encouraging. Per MIT NANDA, 95% of enterprise generative-AI projects aimed at revenue growth have failed ^[4]. Only 23% of organizations have scaled agentic AI at all ^[5]. PwC's chief AI officer, Dan Priest, concedes the point from inside the tent.

If AI is ubiquitous and everybody's got it, it can't be your differentiator alone. — Dan Priest

Then the final turn. The firms betting on AI outcomes are simultaneously becoming the implementation arms of the AI labs that disrupted them. KPMG has gone furthest.

As an OpenAI Elite Partner, KPMG brings deep transformation, industry and implementation experience that can help organisations deploy OpenAI's technology in new and impactful ways. — Colleen Kapase

Accenture has rebranded itself around AI and robotics product distribution ^[6]. KPMG's US chief executive, Tim Walsh, now describes the firm in terms that would have been unthinkable a decade ago ^[7].

There is no doubt that our firm is a tech company that delivers now on audit, tax, and advisory services. — KPMG

The independent advisor has become the channel partner. Not every firm is collapsing — Accenture reported 9% earnings growth ^[8] — but growth now comes from being a distributor, not an advisor. That is what "skin in the game" actually describes. The consultant is not putting capital at risk for a client's benefit. It is absorbing the performance risk of tools made by a company it is also partnered with — tools that, by the industry's own numbers, fail most of the time. The consultant is no longer the independent advisor pricing outcomes. It is the channel partner eating the warranty risk.