Whenever a discussion turns to artificial intelligence (AI), one topic often rises quickly: which jobs will this new technology replace first?
Since the rise of ChatGPT kicked off the current AI revolution, many workers have been anxiously waiting to learn how AI will impact their industries. Experts have predicted the jobs that center around repetitive tasks such as customer service, telemarketing and data entry, will be among the first to be completely automated away.
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Even before these chatbots rose to prominence, retail chains were eliminating cashier jobs by eliminating self-checkout features. But according to recent reports, it isn’t only lower-skilled and low-salary positions that are in danger of being replaced by AI.
In fact, a powerful industry that has long handed out high paying jobs may be on the verge of a major shift. And Elon Musk may be the person responsible for ushering in this monumental change.
AI is coming for some jobs that many people likely won’t be expecting
Since Musk assumed his new position as head of the new so-called U.S. Department of Government Efficiency (DOGE), he seems to have been more focused on eliminating federal spending than running Tesla (TSLA) , SpaceX or any of his other companies. His DOGE team has doubled down on firing government employees and trying to incentivize others to quit.
Many experts have speculated that his method of employing the classic Silicon Valley “move fast and break things” approach to the federal government is unlikely to yield positive results. But now it seems that his new position may lead to other people’s jobs being eliminated as well, this time in the private sector.
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For decades, prominent consulting firms have benefited significantly from lucrative government contracts. This includes industry leaders such as McKinsey and Deloitte, as well as firms like Booz Allen Hamilton (BAH) , whose stock has struggled recently.
Now reports are raising speculation that Musk’s team at DOGE is likely to reduce the money that the federal government spends on consulting firms each year. According to data from The Economist, this could significantly impact firms like BAH and Accenture, which have benefited greatly from lucrative public sector contracts.
The outlet notes that Musk could easily conclude that consulting firms, having tried to fix problems within the government for a long time, are not up to the task and are therefore not a good use of federal funds. Instead, he may be drawn toward redirecting them toward companies from his world.
This could benefit Palantir Technologies (PLTR) , a data analytics company that has carved out a lucrative niche as a defense contractor. Musk recently named its former Head of Intelligence & Investigations to a top position within the U.S. Office of Management and Budget (OMB).
“Unlike most other software providers, Palantir embeds teams of engineers with its clients to help them make use of its technology,” The Economist reports. “For now, it works on many projects alongside firms such as Accenture and Deloitte. But some also view it as a potential competitor to the big consultancies, particularly when it comes to AI.”
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Peter Thiel, one of Palantir’s founders and a former colleague of Musk, has criticized the consulting industry, describing McKinsey as a “total racket.” Musk may have a similar mindset, especially as his appointees have discussed the need for applying an “AI-first strategy” to government offices.
Is AI about to start replacing elite consulting jobs?
Since Musk has made it clear that he is focused on both scaling back excessive federal spending and replacing workers with technology, it seems likely that he will reduce the federal budget for consulting services. The only question is by how much and if he will opt to completely eliminate it.
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To understand how much the use of AI may enable him to reduce the government’s reliance on consultants, TheStreet spoke to Yersultan Sapar, a former Apple AAPL engineer turned co-founder and CTO of Perceptis AI, a workflow automation startup.
An expert in both AI and consulting, Sapar speculates that while the rise of AI will continue to transform the industry, though not necessarily in a way that is bad for human consultants.
“The future of consulting is evolving towards greater fragmentation and specialization,” he states. “While industry giants like McKinsey, Accenture (ACN) , and Deloitte will remain key players, the majority of industry growth is coming from smaller, highly specialized firms.”
Of course, that could also mean opportunity for companies like Palantir at the expense of consulting firms. But Sapar adds that if firms can successfully integrate AI, they could end up delivering superior results.
“This symbiosis will outperform either human consultants or AI alone, giving consulting firms time to adapt and embrace AI. Although AI poses a long-term threat to traditional consulting, the best defense is to integrate AI into their operations,” he predicts.
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