How Are Young Firms Taking the Lead in Booming AI Consulting Market? The Case of KO AI

The AI sector is extremely competitive. Ever since AI became part of our lives, many companies have been trying to leverage the benefits it offers to streamline operations, gain a competitive edge, and improve profitability. Despite a strong desire to implement AI, organizations face challenges, including a lack of implementation expertise, procedural and managerial difficulties, a lack of technological experience and insufficient organizational capacity. This has given rise to a new field that combines management consulting with technological implementation and helps organizations implement AI effectively.

The FDE Model: Bridging Business and Technology

The management consulting industry is a long-established field, with giant companies operating in it that have a history spanning decades. But in the age of AI, the consulting market, like any “knowledge market”, has been shaken up and must adapt. Organizations aren’t just looking for knowledge; they’re looking for practical applicability. An MIT study found that approximately 95% of generative AI initiatives within organizations failed to yield a measurable impact on the bottom line. The problem lies not in the technology itself, but in how it is implemented.

The consulting giants were quick to adapt to the new era. Firms such as McKinsey, BCG, Deloitte, Accenture, and others have launched AI-focused services. However, the transformation process is complex and requires significant changes within these giant companies. At the same time, new consulting firms focused on implementation have emerged. This has brought renewed attention to forward-deployed engineering (FDE) and its role in AI implementation. In the classical model, this is the role of an engineer (FDE) who works within professional teams and aims to translate business needs into technology. The role did not originate as a consulting role but as a primarily technical one. However, in the AI era, it has effectively become a role that combines business acumen with technical skills.  Technology companies such as AWS, Microsoft, and Google have established entire FDE departments to compete with one another.  AWS established an FDE organization with a budget of one billion dollars; Microsoft launched “Microsoft Frontier Company” with a budget of $2.5 billion and approximately 6,000 professionals, while Google leads an effort to replace some FDE work with AI agents.

KO AI as a Representative of a New AI Consultancy Model

KO AI was founded in 2024 in Israel as an applied AI consulting firm and was actually the first FDE company in Israel to offer these services in the context of generative AI. KO AI was founded by Jonathan Kuzmanko, an AI executive in from financial sector and an applied AI researcher.

The company was founded from the outset as an “applied consulting firm.” In other words, it focuses not only on advising clients on how to do things, but also on implementing that advice on both the technological and organizational fronts. The company began by focusing on the reengineering of operational processes in large and medium-sized organizations. On the technological front, the company has concentrated its efforts on expertise in AI and ML and has begun integrating these technologies for its clients. Its business model combines advisory services with hands-on technological and organizational implementation. Its model consists of FDE services backed by deep expertise in professional business domains such as finance, project management, service operations, and manufacturing.

The Boutique Model: Agility and Its Limits

As this model begins to gain momentum around the world, the FDE sector is booming. But while established consulting firms bring limited technological expertise, technology companies are forcing clients to adopt their own proprietary solutions. Companies like KO AI represent a third, more independent and technology-agnostic model in the AI era.

These lean, AI-focused agencies work quickly and adapt readily, serving clients across a wide range of business sectors. According to open sources and national tender data, KO AI works with a very wide range of clients in both the private and public sectors and is involved in sensitive national projects. The data reveals projects worth hundreds of thousands of dollars each.

The demand for their services and capabilities is only growing. They view the market from different perspectives and are gaining multidisciplinary experience.

However, they have their limitations. KO AI states that it operates as a boutique firm with small, ultra-specialized teams, consisting solely of engineers and senior consultants in the field. This means that these companies' ability to work on hundreds or even dozens of projects at a time is limited and they must prioritize clients.