McKinsey Layoffs: McKinsey & Company has laid off more than 10 per cent of its global workforce over the past 18 months, marking one of the largest downsizing efforts in the firm’s nearly century-long history, reports Financial Times. The global consulting giant, which expanded rapidly during the COVID-19 pandemic, has reduced its headcount from over 45,000 at the end of 2023 to around 40,000 today, according to sources familiar with the matter.
The cuts come as the consulting industry grapples with slowing revenue growth following a pandemic-era boom. During the five years leading to 2023, McKinsey’s workforce had grown by nearly two-thirds as it expanded into project implementation and digital services. That growth, however, proved unsustainable as demand declined.
What do we know about the layoffs?
In 2023, McKinsey initiated a major restructuring plan, eliminating 1,400 back-office roles. Later that year, the firm also dismissed 400 specialists in data and software engineering. Additionally, insiders report that McKinsey implemented a stricter performance review process, leading to further exits among underperforming consultants.
Compounding its challenges, McKinsey has faced $1.6 billion in legal settlements tied to its past work with US opioid manufacturers. These legal liabilities, combined with slower growth and reduced attrition in the consulting sector, have prompted a major reset in operations.
Changing market dynamics responsible for layoffs?
The consultancy landscape has shifted dramatically since the pandemic’s peak, when high demand fueled record hiring and voluntary attrition surged during the so-called “Great Resignation.” Today, however, employee turnover has slowed to historic lows, catching many firms off-guard and intensifying the need for formal layoffs to manage staffing levels.
McKinsey’s downsizing contrasts with the performance of its rival Boston Consulting Group (BCG), which recently reported a 10 per cent rise in revenue to $13.5 billion for 2024 and a staff increase to 33,000.
Meanwhile, despite the staff reductions, McKinsey maintains an optimistic outlook. “Our firm continues to grow and we’re doing more impactful work, in more ways, than ever,” the company stated, adding that it will “welcome thousands of new consultants” in the coming year.