How do you explain the ambition of 50 per cent of global revenue coming from AI by 2028?
Wallace: Every dollar of revenue in the future is probably going to be enabled in some way by AI. But the conversation has shifted to using AI as an enabler. AI is going to enable all of the value creation, leadership, action, speed and execution.
What happened in a lot of companies was that there was an eagerness to adopt AI without, perhaps, an overall strategy. Business objectives will have to align. For example, if you just say to your employees, “We're going to measure your use of AI”, but don't give them clear expectations, you may get an inadvertent consequence. In fact, there is speculation about a public company in the US where people are just logging time on these tools because that is what their performance is measured on, but not necessarily generating value.
When you are advising a firm on AI, is the approach also cautious?
Wallace: I think it's important for any organisation to ensure ethical usage. This includes client data protection; certain data prohibited by law should not be ingested by large language models. We do work in the healthcare sector. We have to be very thoughtful about patient information and how that is handled. In litigation, we have to be mindful about attorney-client privileged information.
Bajaj: From a business perspective, after the pilots are done, the conversation shifts to potential use cases. The key metrics that you want to drive as an organisation remain the same, and you assess where AI can deliver more — more growth, efficiency and innovation. Strategic direction is required to identify which AI-led initiatives will generate a better return on investment.
Does the nature of business also impact the decision?
Bajaj: We see a lot more traction in services than in manufacturing. It is not that the applications are not there, but there is bigger disruption in services, at least at the moment. In manufacturing, the disruption is limited to certain functions.
A lot of pilot projects are being done around AI. What challenges are companies facing?
Bajaj: We are talking to organisations that are in different phases of AI adoption. Some are at very advanced stages, where they have gone past the entire exercise of identifying areas and RoI. They want to know how they can actually scale up those use cases. Then there is the whole issue around infrastructure — for example, how to ensure there is no violation of data privacy requirements. There is a whole element that needs to be examined and, at times, redesigned to generate benefits, whether in terms of effectiveness or efficiency.
Wallace: Using AI in a cost-efficient manner has become really important. At our AI Innovation Lab at the GCC in India, we are able to develop solutions that are more affordable than if we were developing them outside the country. In the US, conversations around token costs are taking place. Clients are asking, “Do you have models for managing AI usage?”
As we look to help new clients, or new areas within the firm, roll out AI products, it is very important to be efficient in both development and deployment.
Which is A&M’s biggest market in terms of business and where do you see the most growth opportunities?
Wallace: We started in the US in 1983, which makes it our most established market, followed by Europe and the Middle East (EME). However, Latin America and Asia are in growth mode. In fact, we have seen the overall percentage of our revenue coming from North America decline over the years.
This year as well, our Europe business was considerably up. Meanwhile, revenue growth from Latin America and Asia was twice that of EMEA on a percentage basis. We opened our first office in Africa last week, which is probably the last geography we intend to enter this year.
What has been the growth in India?
Bajaj: We have grown globally at least 100 times in the last 20 years. We had a lot more operators in the mix, along with traditional consulting profiles. In India, in the last three years alone, we have scaled up the team from 250 to more than 1,600 consultants, and from 20 to 60 managing directors, which includes India consulting and the GCC.
The India consulting business grew 64 per cent last year. This year, we expect growth of between 60 per cent and 70 per cent. This has happened because the market has responded with demand. We are on track to grow the India consulting business fivefold over the next five years — it could actually be more.
In India, the problems are more growth-oriented, not just focused on efficiency and evaluation. There is a lot of optimism around business opportunities compared with other regions. Also, there are more new businesses, so the share and growth of that business model may be somewhat higher, but the approach remains the same.
How is the approach when it comes to your own implementation of AI?
Wallace: Our approach is simple for both ourselves and our clients: You must have a clearly defined business strategy. Only then can you define your AI strategy.
We view AI as a very powerful enabler of the products and services that we have always brought to market. We may be able to address different parts of the market. There may be areas where, when labour was manual, we were too expensive for our clients. This may enable us to gain market share in segments we had not really penetrated before because we can now deliver a more efficient product.
 "Alvarez & Marsal's (A&M's) Managing Director and Chief Operating Officer Steve Wallace, and the company's India head and MD Himanshu Bajaj, who also leads A&M's India global capability centre")