AI’s threat to consulting

0:00Hey, everyone. Victoria here. If I'm in your ears right now, that probably means you're a fan of FT podcasts. So did you know that you can experience them in person this Saturday? At the FT Weekend Festival, you can put your questions directly to FT journalists and influential voices, challenge ideas, and meet others who share your curiosity about the world. It's all coming up on the 5th of September at Kenwood House Gardens in London. If you're anywhere else in the world, though, don't worry. You can also join online. You can register now at ft.com slash festival and enjoy 10 % off your ticket with the code FTPodcast.

0:37All right, on to today's show. Good morning from the Financial Times. Today is Monday, August 31st, and this is your FT News Briefing. Soaring demand for natural gas has led to a surge in dealmaking, and consultants are duking it out with their own clients over AI. Plus, it's Tim Cook's last day as CEO of Apple. What is Apple without Tim Cook now? Can Apple survive without the chief diplomat, the politician, essentially, that Tim Cook is? I'm Victoria Craig, and here's the news you need to start your day.

1:23The U.S.-Iran war has helped ignite a scramble for energy deals as buyers compete for limited global supply. Natural gas dealmaking is at its highest level in a decade. More than$32 billion was spent on buying gas production projects in the first half of this year. That's according to industry consultants Wood McKenzie. The rise in agreements combined with the war in the Middle East is pushing up the value of gas assets around the world. That's as national oil companies, especially in the Gulf, try to invest outside their home markets. But it's not just the gas sector where handshakes are happening.

1:58U.S. President Donald Trump announced late Friday that he struck an agreement with Venezuela's interim government for a majority control of more than 65 billion barrels of oil. On Sunday, he pledged to use that to refill the U.S. Strategic Reserve, which has been depleted first during an energy crisis after Russia's 2022 invasion of Ukraine, and then during the ongoing war in Iran. You can read much more on all of these deals using the links in our show notes.

2:33businesses of all sizes from all around the world are telling consultants either lower your fees or we're taking work in-house and leaning more on artificial intelligence Stephen Foley covers the industry for the FT he's been talking to companies of all stripes and joins me now to talk about what this means for the future of an industry worth hundreds of billions of dollars. Hi, Stephen. Good morning. So just tell me how big a threat all of this is to consulting. Well, it's been gathering for a few years, hasn't it, since the launch of ChatGPT, but things seem to be coming to a head as clients now start to get much more confident about taking some project work in-house.

3:16So that's forcing some difficult conversations between consultants and their clients. And these IT transformation projects, which are the core of what we're talking about here, these have been bread and butter for the giant consulting firms now for generations. We spoke to Bayer, for example, the drug company, which says it's using dozens of AI agents to do things like coding and testing when the consultants come in and map an IT system ahead of trying to bring in new software. A lot of that can be done much quicker now. And because it can be done much quicker, that is giving the clients an opportunity to say, we want you to do it at a lower price.

3:56Which makes sense. So how concerned is the consulting industry about all of this? Is there any data that shows that this move is happening already? Well, actually, the industry is going to have quite a good year this year. In fact, we talked to the research group Source Global, who has a prediction that the consulting market will in fact be bigger this year. And that'll be a surprise to people who look at the share prices of some of the publicly traded consulting firms, which are heavily down. But what's happening inside these firms is they're trying to build new practices, bringing new skills and new advice for companies that need to know how to implement AI, how to change their companies, how to do cybersecurity testing now that there's so many more risks.

4:41So is the future essentially of consulting, And can we look at it as sort of less reliance on technical transformations and maybe just more on human-centered things where we add value in terms of judgment and insight that, at least so far, we know that AI can't quite do? Amen. That's certainly true. Yes, the humans still have a role. And in fact, it's interesting, right, because some of the big consulting firms over the last few years, McKinsey and the like, they've really moved headlong into implementation of their advice. But actually, it's the core advice, I think, that could turn out to be the most valuable.

5:17If you look at these IT transformation projects, for example, what the consultants will tell you is that getting real value out of all this new technology, that requires changing the organization and making sure that the staff have new processes and that the staff are really embracing this. And of course, that's very human, right? Good. There's a future for us humans then in the economy, at least for now. Stephen Foley is the FT's U.S. accounting editor. Thanks so much for your time, Stephen. Thank you.

5:51The Taliban wants to do a rare earths deal with the Trump administration. In an interview with the FT, the foreign minister of Afghanistan's Islamist regime said that his country would, quote, absolutely welcome U.S. investments in mining, infrastructure, agriculture and trade. Geological surveys estimate at least a trillion dollars worth of mineral resources in the country, including copper, cobalt and lithium. They've been largely untapped due to decades of conflict. But the FT's Andrea Schapani, who spoke with Foreign Minister Amir Khan Mutaki, said it's not clear if the U.S. is interested.

6:27U.S. President Donald Trump has given no signs at all that he wants closer ties to the Islamist group. But Mutake here added that relations between Afghanistan and the U.S. should not be assessed through the lens of the past 20 years of war, but rather on the basis of future cooperation. Funding from any partnership would be significant for Afghanistan, which remains one of the world's poorest nations with about a third of its population facing acute hunger. And though Kabul has begun to emerge from diplomatic isolation, UN experts warn there should be no moves to normalize the Taliban's de facto authorities who have been sanctioned by the UN in Western countries and who have instituted draconian restrictions on women and girls' access to education, business, and public life.

7:18Today is Tim Cook's last day as Apple's chief executive. He spent 15 years leading one of the world's most valuable companies. But when he took over from the late founder Steve Jobs, there were doubts about whether the quiet COO could fill such large shoes. Michael Acton, who covers the tech behemoth for us at the FT, joins me now to talk about Tim Cook's legacy. Hi, Michael. Hi, Victoria. So just walk me through this. How has the company evolved under Cook's leadership? Because some of the numbers you've been looking at are pretty staggering. Yes, it's really hard to quantify just how much Apple has changed in the space of 15 years.

7:57Cook came in and had to replace one of the most iconic founder CEOs in business history. And so there was naturally a fair amount of skepticism on Wall Street. He really needed to prove to investors that there were new ways to wring revenue out of Apple's products and that there was a real runway for them to grow even bigger. Now where we are with Apple 15 years later,$4 trillion of market cap have been added on. And that really explains what Cook's achieved in those 15 years. Walk us through how he's really won over Wall Street and what that's looked like. So what Cook's managed to do is create this absolutely vast supply chain giant that has extremely high margins, that has a stable and predictable annual cycle of launches of the iPhone.

8:40When Cook came in, Apple was basically the Scrooge McDuck of the tech world. It was sitting on this absolute mountain of cash. So at one point in 2011, it actually had more cash than the US Treasury. But what Cook did was he started to return that cash to shareholders. And so he's actually returned over a trillion dollars if you add up the buybacks and dividends. You never worried about Apple's finances and investors fundamentally like that. Yeah, clearly they like that because Apple's shares have risen more than 2 ,000 percent under Cook's leadership. You know, as we've been talking, Michael, there have been plenty of successes, but also challenges along the way for Tim Cook, too.

9:19I'm curious what those might mean for Cook's legacy as CEO. In terms of legacy, Cook is stepping down as CEO, but he's going to take over this role as executive chair. It's a role that's really interesting because it speaks to this question of what is Apple without Tim Cook now? Can Apple survive without the chief diplomat, the politician, essentially, that Tim Cook is? And it's taken Cook a long time to start diversifying away from China, de-risk the supply chains, look at places like India, Vietnam. And Cook's achieved that because he's also been a consummate diplomat who's flying between Washington and Beijing all the time.

9:58He's done a masterful job of managing sort of Trump's fits of pique around tariffs. And so going back to the executive chair role, Cook's still writing his legacy to some extent. So tomorrow, John Ternus takes the reins. So what are the biggest challenges that he's going to be inheriting from Tim Cook now? beyond this sort of slow-burning geopolitical question around Apple's ties to China we're coming off quite extraordinary couple of years for Apple where it's really been exposed as maybe missing the boat when it came to artificial intelligence they didn't invest particularly heavily early on in the technology and the real pressure on Ternus is to show as a product guy It's about marrying that sort of agentic AI capability, the new Siri, which has finally launched this year, and figuring out what the next generation of hardware is that will keep Apple ahead of the competition because Apple has always set consumer tastes.

10:59And the last couple of years have really felt like maybe it isn't doing that. I don't know, Michael. I still really love my old Apple shuffle, which is just a little tiny green square that I can clip on my shorts when I go out for a run. I am old enough to remember when things were really small and it was kind of cool. There's things like that, though. It is literally how do you excite people with a really sort of neat reiteration of something that maybe kind of fundamentally already exists. Well, I'll leave that up to John Ternes, Michael Acton out in San Francisco for us. Thanks so much for your time.

11:34Thanks, Victoria.

11:40Well, speaking of last days, it's also my last one with you here on the FT News Briefing. But before I go, a huge thank you for starting your week with me, for sharing feedback and for tuning in, despite some early suspicions that I was AI. So to officially close the loop on that one, I am in fact a real live human being. It has been a pleasure to dive straight into the news here each and every Monday morning for the past year. So thank you for listening. And as always, if you want to read more on all of the stories in today's episode, you can find free links in our show notes. This has been your daily FT News Briefing.

12:18Check back tomorrow for the latest business news.

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