This story was mentioned in the Monday Morning Accounting News Brief, published every Monday before noon. We felt it deserves its own post as well.
Last week Bloomberg ran a story about how PwC “has cut prices for some services as clients raised the fact that the consultancy is using artificial intelligence to complete its work quicker.” In other words, clients saw PwC bragging about how AI is eliminating human billable hours and wanted their cut. This according to scoop they got directly from the source:
“Clients would hear us talking about using AI and and say, ‘We want our fair share of those efficiencies,’” PwC Chief AI Officer Dan Priest said in an interview with Bloomberg News. “We certainly, as appropriate, give our clients the pricing benefit of the efficiencies we’re achieving.”
Which and how many clients? And how much have they cut their fees? Your guess is as good as ours. If you are as cynical as we are and know firms as well as we do, your answers are “a couple” and “very little.” Mr. Priest didn’t feel like telling Bloomberg any specifics and added:
He noted, however, that AI-associated price cuts have “plateaued” because the firm’s use of the technology is also improving the quality of its services. “We’re trying to focus more on the value creation,” he said. “There’s a value to that intelligence.”
Priest declined to provide further details on PwC’s pricing, saying that the firm’s broad approach is to “align AI-driven gains with client benefit, whether that’s in efficiency, timeliness, quality or cost.”
Ah so clients want a discount because AI is taking work off the humans’ plates and the firm is getting good at explaining how there’s way more to their fees than time.
We don’t have a number on just how many hours PwC is saving with AI but we do have a figure volunteered up by EY’s Vice Chair of Tax last year to get an idea how it’s working for a single service line at a competing firm. Marna Ricker said to Microsoft that AI is helping her people save up to 14 hours a week by summarizing information, identifying anomalies, and highlighting key themes.
Note to clients: If you’re asking for AI discounts you should go ahead and ask for offshoring discounts too. That’s where their real money savings is.
Did the firms pass on the savings from using cheap labor in India and the Philippines? oh yeah I forgot, they didn’t
I bet our off-shore India workers make $20k a year (if that) yet their billing rate is higher than our local staff. No breaks given to clients. It’s a shame that most firms are doing this.
I don’t have numbers on PwC specifically but I know at BDO it’s more like $15k. This article has some more numbers based on an offshoring talent company’s report (so take with a grain of salt): https://www.goingconcern.com/want-to-know-exactly-how-much-offshore-staff-are-making-gotchu/
That’s interesting about the billing rate…how does the firm justify that? I’ve noticed there’s a big push recently to paint offshore staff as exceptionally knowledgeable, perhaps to cover for the fact that they’re woefully underpaid idk.
Adrienne,
Thats a great question on how they justify it because they dont. They can sometimes take 2-3 more time than a local staff which just blows the budget. As a billing manager you just have to know a writeoff is coming.
I make 8K
Thats what Big4 AI stands for – An Indian
This has been a consistent criticism of mine to our service provider.
I’m happy to argue with the CFO about the increases to the SOW year over year when I know a majority of the compliance team is US based…not so much when it’s based in India. The quality is just not the same in the deliverables or in the technical analysis…
Just to be the devil’s advocate (literally) here, but why should PWC pass the savings on to their clients? The firm spent a shit ton on this investment and they need a payback. When a pharma company spends $100 million to develop a new drug, do they then charge just $0.10 per pill because it only cost $0.05 to make that one pill? Of course not.
The Big 4 firms tell everyone that they’re the best. If they want people to actually believe it, one of the things they need to do is charge more for their services than all the lesser firms are charging. And if their AI really does improve both quality and efficiency (I’m skeptical, but that’s a different discussion), then why shouldn’t PWC charge more for the value they are providing? What difference does it make if the value is provided by a human being or a robot?
No you’re right. I think the bigger question here is if they really have implemented these AI efficiencies. Imo most companies, especially B4 I’d think, are full of shit when they say AI is picking up all this slack. For now. Give it five more years and sure, I’ll buy it.
AI still means Actually Indians in many cases. And on that note, it’s weird AI is the thing that made clients expect a discount and not, oh I dunno, using tons of offshore labor. That has definitively saved firms A LOT of money. I guess because firms aren’t bragging about that the way they’re putting themselves out as masters of AI.