---
id: "prereq-consulting-economics"
type: "prereq"
source_timestamps: ["¶3", "§ Why Firms Will Resist Change"]
tags: ["economics", "industry-knowledge"]
related: ["concept-consulting-pyramid"]
reason: "Necessary to grasp why the automation of junior-level tasks threatens the very financial foundation of legacy consulting firms."
sources: ["reskilling"]
sourceVaultSlug: "hbr-seg-reskilling"
originDay: 10
articleStem: "hbr-edu-44-ai-changing-consulting-structure"
sourceUrl: "https://hbr.org/2025/09/ai-is-changing-the-structure-of-consulting-firms"
sourceTitle: "AI Is Changing the Structure of Consulting Firms"
---
# Traditional Consulting Economics (Leverage Model)

**Prerequisite knowledge:** familiarity with how traditional consulting firms make money — hiring large numbers of junior staff at relatively low salaries and **billing them out to clients at high hourly rates (leverage).** This margin funds the high compensation of the senior partners at the top of the [[concept-consulting-pyramid]].

**Why it's required:** without the leverage math, the threat is invisible. Automating junior-level tasks removes the billable base — see [[claim-pyramid-collapse]] and [[claim-ai-improves-speed-and-quality]] — which is why the financial foundation of legacy firms is at risk and why [[action-redesign-compensation]] becomes necessary.


## Related across articles
- [[prereq-billable-hour-model]]
- [[prereq-consulting-business-model]]
- [[prereq-partner-track-leverage]]