Learn AI or Be Replaced - Accenture’s 11,000 Layoffs Are a Warning

0:00Today on the AI Daily Brief, Accenture lets go of about 11 ,000 people with an indication for more cuts to come for folks who can't be re-skilled for the new Gen AI world. Before that, in the headlines, the AI cost performance frontier continues to improve. The AI Daily Brief is a daily podcast and video about the most important news and discussions in AI.

0:24All right, friends, quick announcements before we dive in. First of all, thank you to today's sponsors, Robots and Pencils, Notion, Blitzy, and Super Intelligent. To get an ad-free version of the show, go to patreon.com slash AI Daily Brief. And if you're interested in sponsoring the show, send us a note at sponsors at AI Daily Brief dot AI. By the way, you might notice that there is a new tab on the AI Daily Brief homepage, which is for speaking engagements. This is being coming up more and more now. And between a daily podcast and everything with super intelligent, I have to keep these slots extremely, extremely limited.

0:55So if you are planning on something and want to find out more about opportunities there, you can send a note at speaking at AIDailyBrief.ai. But with that, let's get to the show. Welcome back to the AI Daily Brief Headlines Edition, all the daily AI news you need in around five minutes. One of the things that I'm tracking most closely is just how much the cost performance frontier is improving. In addition to just raw performance on benchmarks, I think one of the things that's really powerful right now is how much better cheaper models are getting. In other words, the gap between the state-of-the-art models and the faster, more performant, lower-cost models is decreasing, and that brings a lot of production-level use cases online that might have started to get difficult at state-of-the-art prices.

1:37In this vein, at the end of last week, Google announced an update to their small models to deliver more quality, speed, and efficiency. The update to Gemini 2.5 Flashlight focused on better instruction following, reduced verbosity, and stronger multimodal capabilities. As a result, artificial analysis found the model uses half as many tokens and therefore should see a 50 % cost reduction for tasks in production. The Gemini Flash update, meanwhile, was focused on better agentic tool use as well as token efficiency. Manus Agent found the model delivered a 15 % jump in performance on long horizon tasks using their internal benchmarks.

2:10In addition, Google announced and improved Gemini Live, their audio-first real-time API for voice applications. The update has doubled the success rate for function calling and improved how the AI handles pauses and interruptions in audio conversation. You can see on the updated artificial analysis index, the new versions of the models have jumped up meaningfully, closing that gap again between the flagship and the lightweight models. This stuff is far less sexy than Gemini 3, but from here on out, guys, a lot of the updates that are going to matter for the production uses that drive your businesses are going to be these sort of changes.

2:43Now, one thing that is a big headline getter, if it ever comes to pass, will be an actually updated AI Siri. Apparently, we are still making progress towards that goal, with Apple staff now testing the new AI Siri, targeting a release date for early next year. Bloomberg's Apple specialist Mark Gurman writes that the company has developed a chat GPT-like iPhone app for the purposes of internal testing. The app is being used to rapidly evaluate new features, as well as testing Siri's ability to search personal data and perform in-app actions across the iPhone ecosystem. This is, of course, the big unlock.

3:13The reason that people are not totally counting Apple out of the game is that the iPhone is just such a context machine that if they can get it right, it does still seem like their vision of Apple intelligence that actually knows you could come to pass. Still, when it comes to this new application, sources say that the app is purely for internal testing and won't see a public release. Gurman wrote, even without a public launch, the internal tool marks a new phase in Apple's preparations for series overhaul. And jumping out of his normal role as just a news reporter, Gurman dropped some feedback of his own.

3:42He followed up his reporting with a weekend newsletter that pushed the contention that Apple needs to release a ChatGPT competitor to boost the credibility of their AI system. Reflecting on the botched rollout of Apple intelligence, he wrote, Apple's decision to pose as an industry leader while dismissing the chatbot-driven approach of rivals quickly backfired. In a rare misstep, the company bet on the wrong horse. Deeply integrated AI features instead of a ChatGPT-style experience. Apple may be right that this method of system-wide integration will be the future, but its insistence that consumers wouldn't care about chatbots was a costly mistake.

4:13Commenting on the lack of plans to release the product, he continued, this, I believe, is a mistake. While the improvements to Siri will bridge some of the gap with AI leaders, services like ChatGPT, Perplexity, and Gemini have made it abundantly clear that people want a proper chatbot experience. It's proven to be a compelling and useful tool for many parts of life. The lack of a chatbot could also make it harder for Apple to show how far it's come. Siri, after all, has some baggage. After longstanding complaints about the assistant and launch delays of the upgrade, Apple risks muddying what could be breakthrough AI technology by solely embedding it within this existing platform.

4:45Launching the chatbot as a standalone app could generate far more interest. Moving over to fundraising news, image generation startup Black Forest Labs is in talks to raise at a$4 billion valuation. The Financial Times reports that the one-year-old startup is exploring a deal to raise between$200 and$300 million. Black Forest burst onto the scene last August when they partnered with XAI to power Grok's first native image generation tool using their Flux model. And more recently, they partnered with Meta on the much-maligned Vibes AI video feed alongside Midjourney, as well as being added to Photoshop's platform.

5:16The fundraising would quadruple the billion-dollar valuation from their previous round last September. Now, many articles about this fundraise are making a big deal out of this being the second big AI startup out of Europe, with, of course, the other being Mistral, who were themselves in the news. The Wall Street Journal recently reported that Mistral is thinking about how to access private data in order to build a new generation of models. Mistral CEO Arthur Mench said, For the last three years, we've been able to compress human knowledge and make models increase across the board. But now we're reaching a saturation point there, and that means the next frontier is in getting access to a new kind of environment.

5:50Mistral's plan then is to partner with enterprises to conduct post-training using their proprietary data. Dutch chipmaking equipment manufacturer ASML is one of the first test subjects. They recently invested$1.5 billion and Mistral to become their largest shareholder. As part of a strategic partnership, Mistral will embed their own solution architects and applied AI researchers at ASML in order to post-train their models using corporate data. Mench said this partnered approach is necessary for most companies, commenting, the very high-tech companies and a couple of banks are able to do it on their own, but when it comes to getting some return on investment from use cases, in general, they fail.

6:24Lastly today, speaking of Europe and the rest of the world, Anthropic is apparently going on a big global hiring blitz to end the year. They plan to triple their international workforce and are currently actively recruiting country leads for India, Australia, New Zealand, Korea, and Singapore. The expansion will see more than 100 roles added across the London and Dublin offices, as well as new regional offices in Japan and Europe. In addition, Anthropic plans to expand their applied AI team fivefold. The expansion is being overseen by newly hired managing director of international Chris Ciari.

6:53Ciari was previously the president of Europe, the Middle East, and Africa for Google, as well as serving as executive VP of those regions for Salesforce. During his decade-long tenor at Salesforce, he scaled regional business from$200 million to over$3 billion and said, The global demand for Claude is extraordinary. From financial services in London to manufacturing in Tokyo, enterprises are trusting Claude to power their mission-critical operations. This is a key moment for Anthropic to expand the infrastructure and partnership needed to serve this growing international customer base. The announcement came with a series of statistics showing how dramatic Anthropik's international growth has been.

7:25Over the past two years, Anthropik has gone from having 1 ,000 enterprise customers to over 300 ,000. Revenue has grown from 87 million at the beginning of 2024 to over 5 billion today, with Anthropik now officially claiming the lead market share in enterprise AI. Anthropik also estimates that over 80 % of consumer clawed usage is now coming from outside the US, and believe that per capita usage in countries like South Korea, Australia, and Singapore are outpacing consumer use in the US. This is actually one of the really interesting comparison points to AI versus the internet. It took the internet something like 19 years to reach a point where 90 % of usage was coming from outside of North America.

8:02It took AI less than two years to get to that point. This is, in other words, a truly global technology right from the beginning, and it sounds like Anthropic does not want to leave all of that opportunity on the table. For now, that is going to do it for today's AI Daily Brief Headlines edition. Next up, the main episode. Small, nimble teams beat bloated consulting every time. Robots and Pencils partners with organizations on intelligent, cloud-native systems powered by AI. They cover human needs, design AI solutions, and cut through complexity to deliver meaningful impact without the layers of bureaucracy.

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10:47That's B-L-I-T-Z-Y dot com. Today's episode is brought to you by Superintelligent. Now, one thing that we are having a lot of conversations with folks about is the fact that for some of you, your fiscal year is coming to an end, and that means two things. One, it means planning and thinking about what you're going to do in the next year. And two, it means using up those last of budgets so you don't lose them. If you are an enterprise that happens to find yourself in that situation, Superintelligent would love to help on both fronts. We are moving increasingly towards an annual AI planning model where we map out how you can create an action map of your organization's agent opportunities that represents an executable backlog of AI and agent use cases that you can deliver on over the course of the next year.

11:30Additionally, for those end-of-year budgets, we have worked out deals with a number of partners where we can pre-lock in general implementation packages even before you figured out exactly what use cases are going to require them. If you'd like to learn more about super intelligence agent readiness audits and this new end of fiscal year plan, visit us at besuper.ai, click get started, and make sure to use the word fiscal somewhere in the description. Welcome back to the AI Daily Brief. Today we are talking about something which was ripping through my LinkedIn all weekend, which was the fallout of this earnings call from Accenture on Thursday, where effectively the company's leadership said that for those employees that they couldn't reskill in and connect to the new world of Gen.AI, they would be being let go.

12:12Today, we're going to talk about what was actually said, what it says about Accenture specifically, professional services more broadly, and perhaps most generally and most importantly, the state of professional skills in general. So during last week's earnings call, tech outsourcing and consulting firm Accenture laid out plans to cut staff who aren't able to upskill on AI as part of a broader restructuring effort. Here's the quote, which I'm actually including in its entirety. It's been mostly chopped up in other outlets. But CEO Julie Sweet said, Our number one strategy is upskilling, given the skills we need, and we've had a lot of experience in upskilling.

12:46We're trying to, in a very compressed timeline where we don't have a viable path for skilling, some sort of exiting people so we can get more of the skills and that we need. A bit mumbly, but the point is that they're in the midst of a transition where everyone needs to be hip to this new set of Gen.ai tools they have, and for those they can't, they'll be saying goodbye. Around 11 ,000 employees have been quote-unquote exited over the past three months, added to another 10 ,000 in the previous quarter. Overall, Accenture is embarking on a sixth-month restructuring process that will cost the firm around$865 million, with the vast majority of that amount related to severance payments, as well as Accenture divesting of two previously acquired companies.

13:22Sweet said that they expect more AI-related layoffs next quarter, but that they also expect to overall increase headcount over the coming year as the company hires specifically focused on AI skills. Now, this is not a company that's been tanking or anything like that. It may not be insane MAG-7 rates, but the company did grow revenue 7 % year over year, up to just under$70 billion. The reality is that from the ChatGPT moment, this company and basically all of professional services have just been in a race to adapt. Suite told CNBC,

14:20exactly that reskilling means isn't necessarily clear. And during the earnings call, CFO Angie Park said, we expect savings of over$1 billion from our business optimization program, which we will expect that we will reinvest in our business and in our people because it's so important for our future growth. And so we expect to reinvest that while still delivering modest margin expansion. Now, there have been lots and lots of announcements at various points around layoffs and cutbacks, but this one really seemed to grab people's attention. Gabriel Solomon Ramirez writes, this one should hit like cold water to the face.

14:51Wake up to the massive shift that will happen with AI. Even Ivy League MBAs are not immune to this. Accenture, quote, warned staff that more would be asked to leave if they cannot be retrained for the age of artificial intelligence. So as I intimated at the beginning, I think that there are three ways to look at this. The first is what it says about Accenture specifically. The second is what it says about professional services more broadly. And the third is what it says about the state of skills generally. So let's talk first about Accenture specifically. On the one hand, this company has benefited from generative AI as much as just about any other company out there.

15:24Their AI-related bookings were nearly$9 billion over the last year. There was a while there, in fact, where they had made more money from Gen AI than anyone, including OpenAI. Now that, of course, has shifted, but they are still one of the big beneficiaries from a business model perspective from the advance of these new tools. On the flip side, there is a ton of skepticism out there. Back in July, The Economist posted, who needs Accenture in the age of AI? That piece pointed out that the market really is not buying Accenture's story. Their stock price is in fact down 33 % year to date. Wrote The Economist after the company's Q2 earnings report, having made a fortune telling others how to adapt to newfangled tech from the internet to cloud computing, Accenture now faces the self-same predicament in the age of generative artificial intelligence.

16:08As semi-autonomous Gen AI agents sweep the world, who needs consultants? And yes, The Economist points out, quote, It is true that plenty of multinationals can make neither head nor tail of Gen.AI. Ask most managers about the relative virtues of Claude Sonnet 4 or ChatGPTO3 and you get a blank stare. Clearly, some hand-holding is in order. But they ask for how long. Back at the beginning of September, the Wall Street Journal published a piece called How the AI Boom is Leaving Consultants Behind. That piece began, Consulting firms over the past three years have wagered billions on the hope they would play an essential role in the AI boom, helping the world's largest corporations transform themselves with the new technology.

16:44Done right, it could be a boon for an industry already hurting from macroeconomic pressures and layoffs. And in the early days, their pitch seemed to be working. But then the reality set in. The piece continues, clients quickly encountered a mismatch between the pitch and what consultants could actually deliver. They found that consultants, who often had no more expertise on AI than they did internally, struggled to deploy use cases that created real business value. Sometimes consultants built successful proof of concepts, but couldn't scale them across the business. Said Merck's chief information and digital officer, Dave Williams, we love our partners, but oftentimes they're learning on our dime.

17:18And this, by the way, is something I hear constantly. A number of times I've sat in on meetings between some of the big AI software providers and their customers, and one of the big complaints is exactly this, that the GSIs that the software companies have recommended to help with last mile integration don't really know all that much more than the enterprises who are buying the software, leading to this feeling of exactly this, the idea that they're being paid to be experts, but actually they're just still learning. And part of that fact is just based on the structural reality that ultimately there really aren't experts yet per se.

17:50They're just people with more experience than you. Said Greg Myers, the chief digital and technology officer at Bristol Myers Squibb, if I were to go hire a consultant to help me figure out how to use Gemini CLI or Cloud Code, you're going to find a partner at one of the big four has no more or less experience than a kid in college who tried to use it. Something the issue isn't that consultants don't have a role to play, it's that the role that they're trying to play isn't a good fit. Said Fiona Zerniauska, the CEO of Source Global Research, you've got a generation of CIOs that are going to be quite skeptical about consultants' ability to deploy AI.

18:20The problem at the moment is that consulting firms have tried to put themselves at the cutting edge, and it's not really where they belong. So from where I'm sitting, there are some undeniable aspects of AI that are putting pressure on the business model of consultants. Yes, AI makes it more plausible for firms to do things for themselves that they previously hired professional services to do. AI also makes the cost calculus of low-cost BPO-style services look very different. And that is, I think, by the way, an important reminder that when it comes to Accenture, for example, about 44 % of that company's revenue comes from strategy and consulting versus 56 % from technology and managed services, which includes BPO.

18:56The biggest part of their global staff comes from 350 ,000 employees in India. You've also got new types of firms that integrate technology directly and that provide actual hands-on delivery in a way that software companies didn't before. Palantir's forward-deployed engineers have set the template now for how enterprise AI is getting built, and that's just creating a new wave of competition for the big GSIs. But what about the reverse? There are certainly reasons to think that professional services has some really unique opportunities because of AI as well. Gen AI, AI, for example, represents this totally new set of skills that companies need to adapt, which is exactly the type of thing that historically they've called in consultants to help with.

19:31It's an entire transformation vector, one that is bigger and more extensible across the organization than just about anything we've seen. And managing scale of that change is very much its own discipline, which is not necessarily a discipline that most companies have on their own. And not only are there an increasing demand for this new set of Gen.AI skills, these forces for change also put a huge premium on brand trust. Boardrooms are absolutely frenetic right now. And in uncharted waters, they want to make decisions that are seen as justifiable. Hiring one of the leading name brand big consulting and professional services firms is radically safer for those boardrooms than just trying to go it alone or trying to hire some young next generation firm.

20:15My very brief unfiltered take on the professional services landscape, I do think that many, if not most, professional services firms are at least publicly overestimating or overstating their own AI capabilities, particularly their technical capabilities. I think they basically have to for market positioning, but it's also, as you heard from all of the quotes in that Wall Street Journal piece, kind of an open secret. One of the areas that this becomes immensely clear in is any sort of last mile technology implementation. And that, by the way, is creating an opportunity for a new generation of technology native firms like the tribes and fractionals of the world to win deals for that last mile deployment and implementation.

20:50I do think that when push comes to shove, the size of the deals available for the new contenders is to some extent capped because brand is an extraordinary leverage point right now. And in fact, I think that that brand moat buys some serious time and space to have the actual capabilities match the rhetoric of the firms. I think behind the scenes, the firms all know this. And the battle is in fact, can they get better fast enough at all the new stuff that they can keep credibly commanding these big deals. That's the context for all these announcements from Accenture about their reskilling, etc.

21:19It's the public side of the private race to stay ahead of their customers. Basically, they've got the change management skill set, they've got the brand. The question is how fast they can get the AI skills to actually make a dent in all these opportunities that AI seems to represent. And that ultimately is why even at the risk of having to report 11 ,000 layoffs over the quarter, a company like Accenture just has to put this priority on this new generation of AI skills. Ultimately, then, I am not at all bearish on professional services, even from the big incumbents' perspective. But there is a lot of work to be done, and in addition to everything else I've just talked about, I think that there is absolutely an inevitable pricing tsunami coming.

21:58In short, I don't think big enterprise employers who have worked with the KPMGs and Accentures and Deloitte's and EYs of the world are all of a sudden going to abandon them and want to go it on their own. But I think that they are going to increasingly demand more out of those AI deployments, especially as we move out of the proof of concept phase and into the deployment phase. I think that they're going to demand higher technical skill sets than are currently broadly available. And I think that they're going to demand all of that at a price point that is very, very different than what is being charged today.

22:24We'll probably dig into it more broadly at some point in the future. But CB Insights recently put out a survey called the Future of Professional Services. And one of their four key strategic opportunities was turning services into scalable AI products. In other words, evolving from custom consulting engagements to platform-based delivery, industry-specific solutions, and new pricing models. We are, of course, living through one tiny little example of that with Superintelligent, where the sort of discovery work we do to help organizations plan AI and figure out what parts of their work are best suited for agents or other AI solutions, we use agents to do a discovery process at about 10 times the speed and at less than a tenth of the cost of what comparable discovery would have looked like before.