Japan Consulting Bankruptcies at Record Highs as AI and Subsidy Limits Bite

Teikoku Databank reported that from January to May 2026, bankruptcies and voluntary closures of management consulting firms reached 242 cases (74 bankruptcies, 168 closures). Pacing 10% faster than last year, the annual total may exceed a record 600.

The downturn is driven by the failure of low-value-add business models. Firms relying on administrative tasks, such as writing IT subsidy applications, or tax-saving schemes, have collapsed due to stricter screening and saturated demand. Small firms are highly vulnerable to budget cuts. At the same time, high labor costs for top talent cannot be easily reduced without causing service quality declines.

Meanwhile, Japan's consulting market surpassed 4 trillion yen in FY2023 with 170,000 employees, but growth is slowing. As client demands shift toward advanced problem-solving like risk management and M&A, generative AI is rapidly replacing basic research and generic training. Firms failing to transition from labor-intensive, system-dependent tasks face accelerating elimination.