McKinsey Considers Thousands of Layoffs Amid Industry Slowdown

McKinsey & Co. leadership has informed managers in non-client-facing departments of the need to reduce headcount by about 10% across those areas.

The reductions could eliminate a few thousand jobs and unfold gradually over the next 18 to 24 months. The firm employs around 40,000 people after expanding from 17,000 in 2012 to a peak of 45,000 in 2022.

“As our firm marks its 100th year, we’re operating in a moment shaped by rapid advances in AI that are transforming business and society,” a McKinsey spokesman said.

“Just as we’re partnering with clients to strengthen their organizations, we’re on our own journey to improve the effectiveness and efficiency of our support functions.”

Firmwide revenue has remained between $15 billion and $16 billion during the past five years, while the consulting sector faces subdued demand.

The company intends to continue adding client-facing consultants even as it scales back support functions.

Rivals including Accenture Plc, EY, and PwC have implemented similar staff reductions in recent years to address budget constraints from clients.

McKinsey cut about 200 global technology positions last month to incorporate artificial intelligence for certain tasks.

The firm also trimmed around 1,400 roles in 2023 under an initiative known internally as Project Magnolia.

Global managing partner Bob Sternfels addressed partners at an October gathering in Chicago to mark the company's centennial, where attendees included Rio Tinto Chairman Dominic Barton, Visa Inc. chief Ryan McInerney, former U.S. Secretary of State Condoleezza Rice, and Oprah Winfrey.

The net effect of these latest layoffs on overall headcount remains unclear at this stage.

Sternfels, in his second three-year term, told partners at the event that the company anticipates stronger growth in the years ahead.

“I feel we’ve collectively righted our ship,” Sternfels told his fellow partners in Chicago.