Will AI get rid of billable hours?

• WSJ: Say Goodbye to the Billable Hour, Thanks to AI

Ironically, what began as an effort to promote transparency and efficiency for legal work has since become a tyrannical arrangement with both senior people and junior associates motivated to rack up hours to maximize profits. It spread from law firms to accounting firms, consultants and most other professional services firms as the dominant mechanism for value exchange. ...

...as AI handles routine cognitive work, the remaining human contribution shifts toward judgment, creativity and relationship management—the value of which bears little relationship to time expended.

• Value-based pricing represents the most obvious alternative, where fees are tied directly to outcomes achieved or value delivered rather than time spent. 
• Subscription and retainer models offer another path forward, providing clients with ongoing access to expertise and capabilities for a fixed periodic fee. 

 The end of the billable hour also could bring change to the organizational structure of professional-services firms. Instead of maintaining a pyramid structure in which authority flows down from a small group of leaders at the top to a large group of employees at the bottom, these firms might become flatter and more flexible, consisting of a small core of senior experts who assemble teams and technology on an as-needed basis, depending on the client or project.

Transfer Pricing when Demand Increases

A recent news item seems to suggest that Samsung has a vertical relationship problem with its own subsidiaries. Part of Samsung's highly diversified product offerings is that it produces both memory chips and the mobile phones that use them. Samsung's mobile phone division had hoped to nail down pricing and supply for another year, but

... according to a report from SE Daily spotted by SamMobile, is that Samsung Semiconductor rejected the original order for smartphone DRAM chips from Samsung Electronics’ Mobile Experience division.

It appears that demand for memory chips for AI applications is so high that prices have skyrocketed and most chip makers are diverting production to these customers. As a profit center, the internal transfer price just isn't worth it for Samsung Semiconductor. Since the optimal transfer price should be the opportunity cost of its chips, the rejection of this order could be appropriate. This situation may be temporary until either the AI demand subsides or chip production capacity can be increased.