Key facts
- McKinsey & Co. is planning to cut about 10% of its non-client-facing headcount.
- The planned job cuts at McKinsey could amount to a few thousand positions over the next 18 to 24 months.
- McKinsey's employee count has fallen to approximately 40,000 from a peak of 45,000.
- McKinsey's revenue has been flat, around $15 billion to $16 billion, for the past five years.
- Consulting firms are experiencing a slowdown in demand after a period of rapid growth.
- New joiner start dates are being delayed and promotions postponed across major consulting firms.
The consulting industry, particularly major firms like McKinsey & Co., Boston Consulting Group (BCG), and Bain & Company, is navigating a challenging period marked by a slowdown in demand and a need for restructuring. After a boom in hiring and revenue from mid-2020 to summer 2022, driven by corporate adjustments to the pandemic and digital transformation needs, firms are now facing a more cost-conscious client base. This has led to discussions of significant job cuts, particularly in non-client-facing roles, and a focus on improving efficiency.
McKinsey, a prominent advisor to companies and countries, is reportedly considering cutting about 10% of its headcount in support functions, a move that could affect a few thousand employees over the next 18 to 24 months. This comes as the firm's revenue growth has flatlined in recent years, prompting a reset after aggressive expansion. The firm's employee count has already decreased from a peak of 45,000 to around 40,000. Despite these measures, McKinsey plans to continue hiring consultants as it streamlines its support operations.
The cyclical nature of the consulting industry means that demand typically dips during economic slowdowns, as companies prioritize cutting external advisor costs. However, the current downturn's duration and intensity have surprised many. The firms' past practice of extending offers far in advance, based on optimistic projections of future business, has also contributed to the current situation where they are overstaffed in some areas.