Layoffs: McKinsey Cuts Down Global Workforce By 10 Per Cent, After Massive Restructuring In 2023

During the five-year stretch leading to 2023, McKinsey broadened its services to include implementation and digital consulting, which drove a sharp increase in hiring.

However, that rapid growth has since become difficult to sustain as the industry encounters slowing demand.

Source : Freepik

Global consultancy McKinsey & Company has let go of over 10 per cent of its employees worldwide over the last year and a half, in what has become one of the firm's most extensive workforce reductions since its inception nearly 100 years ago, according to a report by the Financial Times.

This significant trimming follows years of aggressive expansion. The company’s headcount, which  surpassed 45,000 by the close of 2023, has now declined to approximately 40,000, reported The Financial Express, citing people familiar with the situation.

During the five-year stretch leading to 2023, McKinsey broadened its services to include implementation and digital consulting, which drove a sharp increase in hiring. However, that rapid growth has since become difficult to sustain as the industry encounters slowing demand.

Restructuring, Performance Reviews, and Specialist Cuts

In an attempt to realign its operations, McKinsey initiated a sweeping overhaul in 2023. That year, the firm eliminated 1,400 administrative roles. Later, another 400 professionals specialising in data and software engineering were also dismissed.

The report further revealed that McKinsey adopted a more rigorous performance evaluation framework, resulting in further departures among consultants who failed to meet the revised standards.

The downsizing comes at a time when broader consulting revenues are tapering off from pandemic-era highs. With fewer employees leaving voluntarily compared to the days of the “Great Resignation,” companies across the sector are now turning to formal layoffs to correct imbalances in staffing.

Legal Woes Add to Financial Pressures

In addition to a changing market landscape, McKinsey is contending with serious legal liabilities. The firm has agreed to settlements totalling $1.6 billion due to its previous consulting work with opioid manufacturers in the United States. The combination of legal costs, declining growth, and fewer voluntary exits has forced a strategic rethink at the firm.

In contrast, rival Boston Consulting Group (BCG) has taken a different trajectory. BCG reported a 10 per cent revenue increase in 2024, reaching $13.5 billion, and grew its headcount to 33,000. The disparity underscores the uneven impact of the industry downturn across major firms.

Despite the challenges, McKinsey remained confident in its path forward. “Our firm continues to grow and we’re doing more impactful work, in more ways, than ever,” the company said, noting plans to “welcome thousands of new consultants” in the upcoming year.