Search Engine Optimization and SEO firms are great, don't get me wrong. They provide business and site owners with an excellent service of allowing people who are searching for their content, find them. The reason these SEO Firms will be all gone some day lies completely in the way that the search engine Google has been changing.
Google is changing...
More and more every day and we see it in the search results. It wasn't that long ago that everyone was consumed with their keyword density percentage, was 5% to high, was 7% to low and so on. These days kw density is a non factor. There is no magic number and it is beginning to look like it doesn't matter at all, besides the fact that you actually have to have the keyword somewhere in the content you are trying to rank well for. I have personally done tests this year and gotten better results by boosting up my kw density for one client specifically. I spent hours and hours editing content, putting more keywords, alt tags, title attributes and so on in throughout their entire site. Then I realized that it wasn't because of kw density that I was getting better results, but because the content had been updated, it was more RELATED to the the actual keywords, and that the links and images were being tagged (& attributed) to the RELEVANT keywords.
So what does this have to do with SEO firms becoming obsolete?
Google is changing more and more to make it so that the only thing that really matters when dealing with onsite SEO is the content. This takes all the optimizing out of SEO and makes it more important to just write good content. If you write good content that: a. Attracts readers b. Keeps them entertained c. Keeps them coming back You'll end up being better off in the long run than if you completely optimize all your on-site factors.
This new evolution of Google...
Doesn't end with the content either. You could write the best content in the world, but if you site is not attractive, doesn't entice the reader or keep them coming back, then you'll be out of luck when it comes to the popularity of your site as well as with your search engine rankings. The way things are moving today, is away from just "Search Engine Optimizing" your site. Instead they're moving to a place where you need to have a "Search Engine Strategy" or an entire "Website Strategy". This strategy is where SEO as we know it is evolving. This evolution looks at every factor from the sitemap, to the wireframe, navigation and even color scheme to ultimately determine where you rank in the search engines.
The more popular your site gets...
The better rankings it will get, and all of the things discussed above (design elements, content, navigation etc) will ultimately determine how successful your website is. The lower your bounce rates are, the longer your readers and visitors spend on your site, the more you update your site and the more they come back are quickly turning into the most important factors of ranking well in the Search Engines. Although SEO firms are far from being extinct, keep in mind that a greater overall "Strategy" will be needed in the long term if you plan to be successful in the Search Engines. And stop adding links to directories! Google started devaluing those earlier this year! ;-)