McKinsey Ties 25% of Fees to Outcomes as AI Erodes Billable Hours

The billable hour has always been a proxy for value in consulting, a way to price expertise when outcomes are hard to agree on in advance. The Wall Street Journal reports that AI is making that proxy increasingly difficult to defend, as McKinsey, BCG, and Bain navigate a structural shift in how they charge clients.

McKinsey's position is the most concretely documented. About a quarter of the firm's global fees now come from outcome-based pricing, according to reporting from late 2025. McKinsey's UK managing partner Michael Birshan said the firm is "doing more performance-based arrangements with our clients," with clients increasingly arriving not with a defined scope but with a result they want and asking McKinsey to price against actually delivering it. The firm's internal AI assistant, Lilli, reportedly runs over 500,000 prompts a month, and consultants cite up to 30% time savings on knowledge work. When internal AI is absorbing that much analytical labor, the hourly rate becomes harder to justify to clients who can do the same math.

The other two of the Big Three are moving in a similar direction. BCG expected AI work to account for roughly 20% of 2024 revenue and projected that figure reaching roughly 40% by 2026. Bain, which announced more than three years of joint work with OpenAI in May 2026 and made an investment in OpenAI's Deployment Company, reports AI and tech-enabled work already at roughly 30% of its consulting business, with leadership projecting that share climbing toward 50%.

The honest caveat is that these numbers come from the firms' own characterizations at media events and investor briefings rather than audited disclosures, so take the specifics as reported, not settled. What the reporting also does not give you is how outcome-based contracts are structured in practice: what baselines are set, who adjudicates whether a target was hit, and whether partner compensation changes as risk shifts from client to firm. Those mechanics will determine whether this is a genuine structural change or a repositioning of the same underlying model.

The secondary signal that may matter more long-term: approximately 150 former consultants from McKinsey, Bain, and BCG have reportedly been contracted to train AI models to perform entry-level consulting tasks. That is a small number today, but it points toward a future where the junior-heavy staffing pyramid that makes traditional consulting economics work gets compressed faster than firms can replace that revenue with outcome-based contracts.