McKinsey has cut more than 10% of its workforce over the past 18 months, turning around a massive expansion plan that peaked during the coronavirus pandemic when the demand for consulting services was high, and the company increased its workforce by nearly two-thirds.
According to people familiar with the matter, the consulting firm has about 40,000 employees, and by the end of 2023, the consulting firm recently published a number with more than 45,000 of them.
The layoffs are one of the biggest jobs in McKinsey's history in nearly 100 years, reflecting a sharp decline in revenue growth across the consulting market. The group also suffered $1.6 billion in legal settlements due to work as its opioid manufacturer.
In addition to laying off 1,400 back-office workers in the restructuring that began in 2023, McKinsey also rejected 400 experts in areas such as data and software engineering last year. It also added pressure on the weakest-performing advisers to resign last year through an unusually difficult mid-year performance review plan, according to people familiar with the matter.
McKinsey's negative numbers have grown by nearly two-thirds in the five years through 2023 as it surpasses its core consulting services to large-scale project implementations and thrives for all consulting firms during the pandemic.
Since the end of the consulting boom, the number of employees who voluntarily leave the professional service team has turned to record lows. The reduced levels of churn surprise many groups when the “roaring job market” and the effects of the pandemic have caused workers to resign, which has led workers to resign and support roles elsewhere that make more meaningful or get more paid.
McKinsey global executive partner Bob Sternfels told colleagues last year that the company intends to "restore balance" by the end of 2024.
McKinsey's shrinking number is in stark contrast to its smaller rival BCG, which reported a 10% increase in global revenue last month to $13.5 billion in 2024 and said its workforce has grown by about 1,000 to 33,000. Two years ago, it had a workforce of 30,000.
According to its annual report, McKinsey's workforce was 45,000 by the end of 2022 and 45,100 by the end of 2023. The 2024 report released this month does not include employee numbers.
The report also does not include revenue figures for 2024, which are different from previous years. McKinsey's revenue is $16 billion in 2023.
"Our company continues to grow and we work with more impact than ever. We will continue to recruit strong hiring and will welcome thousands of new consultants to our company," McKinsey said.
In addition to slow revenue growth, the consulting industry is also introducing the introduction of AI that will automate tasks performed by junior employees while increasing the productivity of others.
EY's global CEO Janet Truncale said at the Milken Academy annual meeting this month that her company will not lay off employees for AI, but can do more. “I want to think we can double the size of the workforce today,” she said.
"The generated AI provides new productivity for our teams," McKinsey said.