The Impact of Digitalization and Artificial Intelligence on Professional Service Firms and their Business Models: The Good, the Bad, and the Ugly

Professional service firms (PSFs), such as management consultancies, audit firms, commercial law firms, and recruitment consultancies, are knowledge-intensive businesses whose key resources are the knowledge and interpersonal skills of their employees. Their business models are therefore particularly exposed to the effects of digitalization and, in particular, artificial intelligence. Although several studies examine the impact of these technologies on individual subsectors, there is a lack of consolidated and comparative analyses across the industry. Moreover, because no uniform definition of “business model” has been established, existing studies rely on heterogeneous conceptualizations. This paper closes these two gaps by applying a consistent business-model framework across subsectors and reporting the effects in an aggregated, comparative format. We also discuss the implications of these changes for the education and training of future consultants.