Big Consulting Firms Freeze Starting Salaries — AI Reshapes Entry-Level Pay in 2025

What’s going on: Starting pay stays frozen as AI infiltrates consulting

An industry-wide signal just dropped: many of the big consulting firms — think McKinsey, Deloitte, EY, and KPMG — have frozen entry-level compensation for the third consecutive year.

Graduates expecting salary bumps may be in for a surprise: despite inflation, cost pressures, and rising living expenses, starting salaries remain flat. For many junior consultants, it’s becoming clear that the “pyramid model” the industry has long relied on — heavy intake at the bottom rung, gradual promotions upward — is being quietly reworked.

Why now? The trigger appears to be the rise of AI-driven tools that automate many of the tasks traditionally handled by junior analysts — research, data crunching, slide-deck creation, market scans, etc.

That automation reduces the need for large cohorts of entry-level hires. And if firms can deploy fewer people to do the same work — or get more output from fewer analysts — then there’s little incentive to increase pay.

How AI is reshaping consulting economics — and what it means for labor

Productivity jumps; human leverage shrinks

In today’s landscape, AI isn’t just a productivity hack — it turns junior-level workloads into something a handful of analysts (or even fewer) can manage. That means a single “AI-augmented consultant” can do the work of several old-school trainees.

That shift cracks open the traditional consulting “pyramid”: where once firms flooded juniors at the base (with turnover baked in), now they may instead adopt an “obelisk,” “hourglass,” or “platform” model — far fewer juniors, more reliance on senior or specialized staff.

Margins get juicier — but junior careers get uncertain

For firms, margin expansion looks appealing: deliver the same work with fewer people, pay the same wages, and save on overhead. But for juniors, this could feel like being squeezed: fewer hires, narrower paths for promotion, and more competition.

This trend could reshape the talent pipeline — and potentially limit how many people ever reach senior ranks.

What this means for markets & capital flow

• Enterprise-software, AI-infrastructure, and automation platforms — firms building the tools that enable this productivity boost could see increasing demand. Think cloud infrastructure, collaboration tooling, large-language-model vendors, data-stack providers.
• Human-capital-heavy firms may lose appeal — services built on large junior bases (traditional management consulting, staffing-heavy services) could see valuations pressured, especially as growth prospects dim.
• Labour-market segmentation intensifies — high-skill, AI-augmented specialists may command rising wages and attract capital; generalist junior-heavy models may shrink or disappear.
• Private equity / PE-backed consulting boutiques — could become lean, profitable alternatives to legacy giants, especially if they build with AI from day one, avoid overhead, and operate with tighter margins.

For options traders and capital allocators, this could translate into a rotation: out of legacy consulting-heavy or labor-reliant businesses; into automation, AI-software, and productivity-enhancement plays.

What to watch: signals that the shift is already baking in

• Reduced entry-level hiring announcements or headcount cuts at major consulting names.
• Rising M&A, investment, or partnerships in enterprise-AI, data-stack, and cloud-infra firms (e.g. firms building internal copilots, LLM products, automation pipelines).
• Increased open-interest or call volume on publicly listed firms in AI-infrastructure / SaaS / automation — a signal investors see upside in labor-replacing productivity bets.
• Shrinking valuations or limited growth expectations for labor-intensive service firms.

The big picture: consulting’s “youth factory” is shutting its gates

What used to be a reliable conveyor belt — mass-hire juniors, train them up, promote a fraction — is being quietly dismantled. AI isn’t just streamlining consulting work — it’s re-architecting the business model.

For new grads showing up in 2025 (or soon after), “consulting career” may no longer mean climbing a ladder — it may mean fighting for scarce spots, competing with AI-augmented peers, and/or pivoting elsewhere.

For investors, the shift highlights where future value may come from: not human-hours, but tools that multiply human output — where firms are betting on tech, not headcount.