Client interest in generative AI was intense throughout 2023, following the launch of ChatGPT in November of the previous year. And when we surveyed them about their use of GenAI in Q3 of 2023, an astonishing 85% of clients said they were engaging with it. At that point, firms told us that businesses were interested in talking but weren’t yet buying solutions: Clients and consultants alike were on an enthusiastic learning curve. However, in Q1 2024, the bubble of enthusiasm appeared to have burst, with only 13% of clients saying they were using GenAI—they were worried that the tech was immature, and that hype was at play. The big news is that now, in Q4 2024, the bubble has reinflated: Eighty-four percent of clients say they are currently engaging with GenAI, and 14% say they are using it extensively.  

So, are clients ready to buy services from firms in this space? Well, when it comes to investing in technology-related consulting, clients say they are still more likely to spend on data & analytics, tech implementation, tech strategy, and cybersecurity work than on exploiting the opportunities of AI. However, when we asked clients how likely they are to use consulting support around AI and similar technologies, 71% said they are very likely to use consulting support for advice, and 50% very likely to use it for implementation.  

But where exactly will those opportunities lie? So far, AI has been making the biggest difference when clients use it to drive productivity and cut costs, and it’s being used the most by the data & analytics function. This is likely to continue, and firms will pick up work in these areas, but as clients’ goals change and growth jumps up the agenda, where else should firms be leveraging their expertise? One good place to start is by looking at the areas where clients say they are struggling. 

 

Clients worry about keeping up with AI regulation 

At the start of 2024, clients anticipated that their biggest problem when implementing generative AI technologies would be a lack of skills. We’ve all had a year or so to get familiar with at least the basics, and so this challenge has now droppped slightly down their list of concerns. In its place, a lack of clarity around regulation has shot to the top, with 32% of clients selecting this as a major concern. Clients also say they lack skills in this area, highlighting talent shortages in ethical AI & governance and general regulation & compliance.   

There is a space here that firms could fill. Clients are likely to look for advisory support around keeping up with new regulation and ensuring that policies and reporting are compliant from the get-go and remain so in what promises to be a rapidly evolving space. Consulting, audit, and legal services firms may all find opportunities here.  

Beyond staying abreast of new legislation, clients will likely need support designing processes, setting up governance structures, and monitoring or policing adherence. Firms that can provide compelling examples of how they are tackling this in their own organisation will be well placed to win this work.  

Clients face new workforce challenges 

Consulting around HR, people, and change topics has been growing more slowly than other services over recent years. In fact, this market contracted in 2023 and looks set to do the same in 2024. However, our last quarterly survey showed it make an unexpected climb up the ranking of areas where clients expect to use consulting support, rising from 13th spot to eighth. It is possible that greater adoption of AI could be playing a part here, with clients citing pushback from their workforces as being the second-biggest challenge around implementing GenAI.

Advisory work around integrating people and AI, upskilling the workforce, and managing the cultural impact of such a seismic shift in the workplace could follow. Here at Source, we’ll be keeping a close eye on this trend and will keep you informed.

 

Many skills gaps persist 

While a lack of skills in GenAI technologies has slipped down clients’ lists of AI concerns, it remains in joint-third place, with 27% of clients saying it is one of their top two worries. And the catalogue of talent shortages clients are concerned about is wide, with no one standout area to focus on for an easy win. It’s likely that clients will reach out for help upskilling their people and for consultants that can directly plug resource gaps in areas as varied as ethics & governance, AI research and development, and data science & engineering. It’s worth noting that these are the types of skills that remain hard for firms themselves to recruit, and boutique technology challengers will likely be competing hard for some of this work.  

While clients clearly want help planning and implementing their GenAI investment, it would be remiss to ignore the other challenge that clients signalled as their joint-third biggest: Their technology budgets are already overstretched. While finances are tight, all proposals will need to be backed up by strong evidence of an acceptable return on investment. However, we fully expect clients to keep spending on tech projects that they see as critical to their ambitions for resilience and growth, particularly ones that will prevent them from falling behind their competitors.  

Ultimately, tech transformation, data & analytics, and cybersecurity work may be ahead of GenAI projects in the queue for investment. However, there is still demand from clients for help in the GenAI space, and those proposals that speak to the big challenges and skills gaps that clients are facing here are most likely to win work. 

Emma Carroll, Head of Content, Source 

 

If you would like more information about any of the data in this article or would like to access our expert insight into what clients are asking for in today’s market, then get in touch. Source can help you assess the shifting commercial landscape and better understand how your clients are behaving with the help of our bespoke leadership briefings, in-depth client surveys, and market data & forecasting.