McKinsey is drawing up plans that could see thousands of job cuts over the next two years as the global consulting firm responds to rapid advances in artificial intelligence and a continued slowdown in client demand.
The firm’s senior partners are understood to have had early discussions with heads of non-client-facing departments about reducing team size by up to 10 percent. While McKinsey declined to confirm the extent of the cuts, Bloomberg, which first reported the plans, estimated that “a few thousand” jobs could be lost gradually over the next 18 to 24 months.
A McKinsey spokesman said the company is reviewing its internal operations as technology changes the way work is done.
“As our company celebrates its 100th anniversary, we find ourselves at a time of rapid advances in AI that are transforming business and society,” the spokesperson said. “Just as we work with customers to strengthen their organizations, we are also on our own journey to improve the effectiveness and efficiency of our support functions.”
McKinsey is one of the world’s most influential management consultancies, advising companies and governments on strategy, technology adoption and cost reduction. Its customers include large multinational companies such as Coca-Cola, Microsoft and Goldman Sachs, as well as public institutions around the world.
Cutting costs, often through workforce reductions, is a common recommendation from McKinsey and its colleagues to clients. The company itself launched an aggressive hiring drive between 2012 and 2022, when global headcount increased from about 17,000 to 45,000. That number has since fallen to around 40,000 following an earlier round of layoffs in 2023. About half of McKinsey’s employees work in non-client-facing or back-office positions.
Bob Sternfels, global managing partner of McKinsey, flagged the possibility of further cuts earlier this year. In a television interview in September, he said the company would “probably have fewer people in non-customer areas” as technology changes the way internal operations run.
“We continue to hire people to serve clients and we see an increasing need for them,” Sternfels said. “But we’re rethinking our center-based operations using all of these new technologies.”
McKinsey’s plans mirror decisions made by other large companies as AI reduces the need for human labor in support functions. Salesforce boss Marc Benioff said in August the company had cut 4,000 customer support jobs because it needed “fewer heads”, while fintech group Klarna had drastically reduced its workforce after replacing many jobs with AI systems.
At McKinsey, discussions about job cuts are said to be at an early stage and no final decisions have been made on the exact number of jobs affected or which countries will bear the brunt. The company employs around 2,000 people in the UK, including a significant number in non-customer facing roles.
Beyond technological change, the proposed cuts also reflect a general slowdown in demand for consulting services. Many companies have curbed spending on consultants over the past two years amid geopolitical uncertainty and a weaker global economy, following a surge in consulting activity in the immediate aftermath of the pandemic.
McKinsey’s Big Four competitors Deloitte, EY, KPMG and PwC also saw a decline in revenue growth and reduced their workforce. McKinsey’s own annual revenue has remained largely stable at $15 billion to $16 billion over the past five years, although Sternfels told partners at the company’s annual meeting in Chicago in October that he was increasingly optimistic about future growth.
For now, McKinsey appears poised to apply to itself the same logic it has long pushed on its clients: using new technologies to do more with fewer people.
