McKinsey & Co. is reportedly considering a new round of cost cuts, which could include layoffs in roles that do not directly work with clients, as the firm deals with slower growth and a more challenging business environment.
According to a Bloomberg report, McKinsey’s leadership has discussed plans with managers in support teams to cut about 10% of jobs in those areas. This could mean several thousand roles being reduced, with the process likely to happen gradually over the next 18-24 months.
These discussions are taking place even though the firm’s top leaders struck a positive note at McKinsey’s annual partner meeting in Chicago in late October, which also marked the beginning of its 100-year celebrations. At the event, global managing partner Bob Sternfels reportedly told partners that the firm was set for renewed growth as it entered its second century, as per the report.
Revenue growth stalls after hiring boom
After years of aggressive hiring, McKinsey’s revenue growth has mostly stalled. Its annual revenue has stayed between $15 billion and $16 billion over the past five years, leading insiders to describe the current phase as a reset in how the firm controls costs, the report mentioned.
“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 company’s spokesperson told The Times.
The firm added that it is looking to improve efficiency in support functions while continuing to invest in client work.
Unclear impact on overall workforce size
It is still not clear how these moves will affect McKinsey’s total workforce. The firm expanded rapidly over the past decade, growing from about 17,000 employees in 2012 to around 45,000 at its peak in 2022. Since then, headcount has fallen to roughly 40,000.
The possible job cuts highlight the pressure facing the global consulting industry, as clients cut back on spending and take a closer look at advisory costs. Other major firms such as EY and PwC have also reduced staff in recent years. McKinsey itself cut around 200 technology roles last month as automation and artificial intelligence begin to take over some tasks.