What began in low-cost call centers in the Philippines is now reaching the luxury towers of New York and the giant offices of London, into the heart of the consulting industry. Two weeks ago, Israeli company Fiverr announced it was laying off 250 employees, about a quarter of its workforce. The cuts followed a sharp decline in activity on its platform, which connects freelancers with organizations, as jobs such as translation, design, and programming migrate to AI agents.
A decade ago, or even five years ago, it was difficult to imagine these professions being replaced by AI. But nearly three years after the launch of ChatGPT, it is clear that artificial intelligence can, and will, replace service providers, even in knowledge-intensive white-collar professions. This is not another warning about jobs lost to AI. The shift from human providers to intelligent software is creating a new entrepreneurial opportunity in a market worth $4 trillion.
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Lotan Levkowitz.
(Photo: Yoram Resehf)
“The layoffs at Fiverr are just the beginning,” says Lotan Levkowitz, a partner at Grove Ventures. “We are seeing the transition from service companies, people who sold hours of work, to software that replaces them. This will affect even the most prestigious professions.”
Last month, the Wall Street Journal reported that consulting firm McKinsey had deployed 12,000 AI agents in tax and auditing processes. According to the report, some partners describe the move as an ‘existential threat.’ If AI can replace thousands of hours of analytical work by junior consultants, the entire business model changes, the report explained.
McKinsey employees are already adapting: 70% now use Lilli, the firm’s AI-powered internal search system, on a daily basis. Rivals are moving too. EY has launched an AI platform for tax management and pledged $1.4 billion to artificial intelligence over five years. Deloitte is rolling out Microsoft’s Copilot in its consulting practice, and KPMG uses Clara AI in audits as well as other AI tools to improve decision-making.
Artificial intelligence is reshaping consulting from within. Instead of a hierarchy of partners, managers, and juniors conducting research, analysis, and modeling, AI performs data collection, simulations, and comparisons, creating flatter structures where senior experts work directly with software.
A Harvard Business Review article noted that firms combining consulting, product development, and AI are already experimenting with new business models: subscriptions and software-based services replacing one-off projects.
“We’ve had two decades where everything has become SaaS,” Levkowitz explains. “Yet consulting remained one of the last multi-trillion-dollar industries untouched by software, because every client required unique solutions. But generative AI now enables personalization at scale. Suddenly, customers can choose from a menu of options and, instead of paying consultants by the hour, receive a software-driven solution.”
This shift spans both ends of the spectrum, from $5 Fiverr gigs to Harvard-educated McKinsey consultants. “The entire services world, from the cheapest to the most expensive, can now be turned into software,” Levkowitz argues. Still, not all jobs are equally vulnerable. Routine roles such as customer support are easily automated, while sales roles requiring emotional intelligence remain harder to replicate. “What we’re seeing now is the beginning of a revolution, mostly in jobs already outside the company’s core,” he says.
The Rise of “Service as Software”
This transformation opens a vast opportunity for startups. Israeli entrepreneurs, Levkowitz argues, are particularly well positioned to lead in “Service as Software.”
“In just the last two years, 40 Israeli companies in this field have raised more than $1.5 billion, and some are already generating significant revenues,” he says. “It’s a new wave of players that will become an important part of the ecosystem.”
Examples include ActiveFence, which replaces armies of human moderators in Sri Lanka and Kenya with AI that flags harmful content, and Wonderful, which automates call centers in Hebrew. REAL has built an AI-driven platform for corporate real estate management, traditionally handled by consultants.
Startups do not need to become “the new McKinsey,” Levkowitz emphasizes. Instead, they can dominate niche verticals, cybersecurity, real estate, customer service, by building deep expertise and global products.
At Grove Ventures, the “Service as Software” landscape is mapped into seven areas:
Financial Operations (collections, payments, financial reporting)
Customer Service (call centers, support)
IT and Security (systems and data management)
Compliance and Risk Management (monitoring regulations)
Workforce Management (HR automation)
Go-to-Market (sales and marketing platforms)
Business Operations (organizational processes and efficiency)
Israeli companies already leading in these categories include fintech firm Tipalti (Financial Operations), HiBob and Papaya Global (HR), and Gong (Go-to-Market).
Despite the momentum, hurdles remain. First is branding. “If I hire McKinsey, no one fires me, that’s the safe, established choice,” Levkowitz notes. Decades of relationships between executives and consulting firms create psychological barriers to switching, even when superior technology exists.
The business model is another challenge. Clients accustomed to paying for visible consultant hours may resist recurring SaaS subscriptions: “Why pay next month if the problem was solved in two weeks?” Even large firms like Palantir face this pushback.
Organizational structures also need to evolve. Personalized solutions require roles beyond traditional product, marketing, and sales teams. Palantir, for example, created “Forward Deployed Engineers” and “Deployment Architects” to tailor solutions with clients. Startups in this space may need to invent similar hybrid roles.
Finally, trust and proximity matter. Human consultants provide reassurance, training, and presence. AI software lacks that personal touch. “You can’t expect clients to leap overnight. They need to be guided gradually into a world where services come from software rather than veteran consultants,” Levkowitz says.
Yet once entrenched, “Service as Software” companies can become indispensable infrastructure. “If you replace an entire customer service department with AI agents, all institutional knowledge is embedded in that system. It creates immense dependency,” he concludes.