Former EY UK Chief Warns Large Firms Are Struggling to Keep Pace with Boutique AI Start-ups

London. Sir Richard Northcote, the former UK head of EY, has sounded a cautionary note for the Big Four accountancy and consulting giants as the firmament of professional services braces for an AI-driven transformation. In a recent interview, Northcote highlighted that the sheer scale and entrenched structures of PwC, Deloitte, EY, and KPMG are hindering their ability to swiftly adopt cutting-edge artificial intelligence solutions.

According to Northcote, who led EY UK through a period of rapid digital investment, “Large legacy organisations move at the velocity of institutions, not innovations. Meanwhile, boutique start-ups, often founded by AI specialists, can iterate and deploy new tools in weeks, not quarters.” His warning comes amid mounting pressure for professional services firms to integrate generative AI into audit processes, tax advice, and risk management.

Research by industry analysts reveals that while the Big Four have collectively invested over $4 billion in AI initiatives since 2023, internal adoption rates lag behind expectations. Complex governance frameworks, legacy IT systems, and risk-averse cultures slow down piloting and scaling of AI-driven services. Northcote asserts that these firms risk ceding market share to leaner competitors that offer specialized, AI-first solutions.

Nimble boutiques, such as AIBoost and TaxTech Innovations, exemplify the new wave of AI-enabled professional services. These startups leverage machine learning to automate complex tax filings, perform real-time audit sampling, and generate bespoke financial forecasts. Clients report turnaround times reduced by up to 70% and significant cost savings compared to traditional engagements.

However, the Big Four maintain that their scale provides robustness and compliance safeguards that smaller outfits struggle to match. A senior partner at Deloitte remarked, “While agility is key, governance and accountability are non-negotiable in regulated industries. We are balancing innovation with the highest standards of professional responsibility.”

To bridge the innovation gap, the Big Four are restructuring their technology arms and forging partnerships with AI startups and cloud providers. EY, under outgoing CEO Gemma White, launched an ‘AI Foundry’ in early 2025, recruiting data scientists and ethicists to co-develop tools with client teams. Nevertheless, Northcote underscores that structural inertia remains a formidable obstacle.

Clients, particularly in the financial services and consumer sectors, are increasingly demanding demonstrable AI capabilities. A recent survey by consulting firm Carnell & Co found that 68% of corporate CFOs would consider switching advisory firms if their current provider failed to offer AI-enhanced insights. This trend has intensified the race to embed generative AI across portfolio management, regulatory reporting, and transaction advisory.

Meanwhile, regulatory bodies are also stepping into the fray. The Financial Conduct Authority is reviewing guidelines to ensure AI-driven advice is transparent and fair, while tax authorities in several jurisdictions evaluate the reliability of algorithmic filings. Such scrutiny adds another layer of complexity for large firms wary of regulatory missteps.

Industry veterans advise that the solution lies in a hybrid approach: retaining centralized oversight while empowering cross-functional agile teams to pilot AI solutions. Northcote suggests creating ‘innovation sandboxes’ where startups and internal teams collaborate under controlled risk parameters. Early trials have shown promise, but scaling remains the crucial test.

As the professional services landscape evolves, the ability to adapt rapidly without compromising on trust and compliance will determine the winners. The Big Four’s challenge is not only to invest in AI, but to transform their organisational DNA. In Northcote’s words, “Scale is an asset; agility is a necessity. Master both, and you secure the future.”