McKinsey cuts 10% of workforce amidst market slowdown

McKinsey & Company, the prestigious New York-headquartered consultancy, has reduced its workforce by over 10 per cent over the past 18 months following a boom in growth during the pandemic. With employee numbers falling from more than 45,000 at the end of 2023 to approximately 40,000, the firm now faces challenges stemming from reduced demand in the consulting market and expensive legal settlements linked to its work with US opioid manufacturers.

The firm experienced significant expansion in the five years leading up to 2023, growing its headcount by almost two-thirds to meet a surge in pandemic-driven demand. However, recent times have seen the consultancy implement cost-cutting measures, laying off 1,400 back-office staff as part of a restructuring programme that began in 2023. Additionally, a tough mid-year performance review system introduced last year placed additional pressure on underperforming consultants to leave the firm voluntarily.

Last year, McKinsey also dismissed 400 specialists working in areas such as data and software engineering, reflecting the contraction of services requiring technical expertise. This downsizing follows a low attrition rate recorded during the immediate post-pandemic period. McKinsey’s revenue for 2023 stood at $16 billion, but recent reports no longer include figures on headcount or overall revenues, indicating a potential shift in company disclosure priorities.

Despite these reductions, McKinsey remains optimistic about its future. A firm spokesperson emphasised that McKinsey continues to leverage generative AI to boost productivity and create additional value for clients. They also highlighted plans to recruit thousands of new consultants this year, demonstrating an ongoing commitment to strategic growth amid challenging circumstances within the sector.

The consulting industry has been under pressure, with other firms such as Deloitte also announcing workforce reductions amidst a broader market slowdown. McKinsey’s response reflects both its resilience and its ability to adapt to shifting market dynamics, navigating through economic turbulence while maintaining its reputation for delivering transformative solutions to clients.