McKinsey & Company, one of the world’s leading management consulting firms, has announced a major workforce reduction, cutting 10% of its global staff.
This marks one of the largest downsizing efforts in the firm’s nearly century-long history.
The layoffs, which have unfolded over the past 18 months, come as the consulting industry grapples with slowing revenue growth following a pandemic-era boom.
The firm’s headcount has dropped from over 45,000 employees at the end of 2023 to around 40,000 today.
The restructuring reflects changing market dynamics, as consulting firms adjust to declining demand and reduced attrition rates.
Reasons Behind the Layoffs at McKinsey
McKinsey’s aggressive expansion during the COVID-19 pandemic saw its workforce grow by nearly two-thirds as it ventured into digital transformation, project implementation, and data analytics.
However, as demand cooled post-pandemic, the firm faced financial strain, prompting a major reset in operations.
Additionally, McKinsey has been dealing with legal challenges, including $1.6 billion in settlements related to its past consulting work with opioid manufacturers in the United States.
These financial liabilities, combined with slower revenue growth, have contributed to the firm’s decision to trim its workforce.
Restructuring and Job Cuts
The layoffs have affected employees across multiple divisions.
In 2023, McKinsey eliminated 1,400 back-office roles, followed by 400 specialists in data and software engineering later that year.
The firm also tightened its performance review process, leading to further exits among underperforming consultants.
Despite the downsizing, McKinsey maintains an optimistic outlook, stating that it continues to grow and expand its consulting services.
The firm has indicated plans to hire thousands of new consultants in the coming year, focusing on strategic areas where demand remains strong.
Industry Impact and Rival Firms
McKinsey’s workforce reduction reflects broader trends in the consulting industry, where firms are adjusting to lower voluntary attrition rates and slower project pipelines.
The sector, once buoyed by the Great Resignation, is now facing stabilized employee turnover, forcing companies to resort to formal layoffs.
In contrast, Boston Consulting Group (BCG) has reported a 10% increase in revenue, reaching $13.5 billion, and has expanded its workforce to 33,000 employees.
This divergence highlights how consulting firms are navigating economic shifts differently.
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