Is it time to sell short the shares of consulting companies, and make big profits? Or has the smart money already done this?

Photo above – “Bob” and “Bob”. These are the consultants hired by InTech in the film “Office Space”. The Bobs eventually recommended firing all InTech employees, plus the manager.

Some people already know how consulting companies work: Places like McKinsey, Bain, and Accenture send people to your headquarters (typically at $200,000+ per week for a basic team) and tell you what you're doing wrong. This will team consist of a guy from Pakistan, a guy from Korea (don’t worry, they are both ESL proficient) led by a 3rd guy who went to Harvard and speaks American fluently.

But before Manny, Mohammed and Park tell your company what it could do better, they first have to do a deep dive on everything you already ARE doing. Open your books, please.

Once the team has harvested your most treasured corporate secrets, they upload these to their consultancy database. Then the press a button, and you get a 135-page report and big bill: “stop doing this and that. Start doing the stuff which the market leader in your sector is already doing. Send a check for $250,000 to the address below. And schedule a follow-up appointment in 6 months so we can see how well you follow instructions. Thank you for being our customer.”

Don’t laugh. This is really how it works. Consultants first dissect your own processes and secrets. If you have some which are worth anything, the consultants save those for resale to your competitors. Then they sell YOU the processes and secrets harvested from your competitors. The snake eating its own tail.

But this shell game is apparently coming to an end. (See link below). It turns out that stealing intellectual property (corporate, financial, creative, etc.) and then regurgitating it is the very thing Artificial Intelligence was born to do. And at a fraction of the cost. Old school dinosaur consulting companies are in crisis and may not survive this asteroid hit.

Is there still time to get ahead of the curve, and bail on these Titanics? Not with Bain and McKinsey – they are both privately held. Accenture (N:YSE ticker ACN) might deserve a look. Shares are down from $320 to $159 over the past year. If your usual strategy is to “buy on the dip", think carefully this time. ACN's all-time high was reached during the Covid crisis, and it’s had rough sledding ever since.

Marsh and McClennan (ticker MMC) may also be on some people's radar scope. Because it’s trading at 52-week lows as well.

I don’t follow this business sector as an analyst. If I did, I might have been aware of the asteroid strike sooner. The usual disclaimer goes here: "You may or may not make money selling stocks short. You may or may not make money selling or buying any stock at all."

Consulting firms might eventually pivot to an AI based strategy and strike it rich - who knows? They might develop their own proprietary agentic models which are more clever than Open Ai, Google, and Deep Seek. But I’m not betting on that.

I’m just sayin’ . . .

AI is forcing McKinsey, BCG, Bain to rethink consulting fees - TheStreet
https://www.thestreet.com/markets/ai-is-forcing-mckinsey-bcg-bain-to-rethink-consulting-fees

This writer owns no shares in ACN or MMC