McKinsey could cull as many as 2,000 back-office staff as the global consulting firm embarks on one of the largest rounds of cuts in its history.
The precise number of job reductions has yet to be determined, but could range from several hundred to a couple thousand, a person directly familiar with the matter said.
The consultancy confirmed on Tuesday that it was “redesigning the way our non-client-serving teams operate for the first time in more than a decade, so that these teams can effectively support and scale with our firm”, but did not provide further details. News of the job reductions was first reported by Bloomberg.
The restructuring would hit departments such as human resources, technology and communications, the person familiar with the matter added. McKinsey’s legal and compliance teams, which have been beefed up in the wake of scandals such as the firm’s work for opioid manufacturers and links to corruption in South Africa, will not be affected.
McKinsey has recently slowed down hiring of back-office staff, said a second person with knowledge of the matter. Other senior industry executives said they expect many consultancies to make cuts to their back- office operations to control costs.
However, McKinsey stressed that it would “continue to hire client-serving professionals” as demand remained strong. The firm has added 17,000 staff over the past five years and now boasts a global workforce of 45,000, with just over half in “client-facing” roles*.
McKinsey, along with rivals Bain and BCG, last year unveiled one of the biggest rounds of pay rises for new hires in more than two decades, as booming demand for consulting services and a tight labour market forced them to compete for employees.
The company, which took in a record $15bn in revenue in 2021, surpassed that figure in 2022, a person close to McKinsey said, although a precise number has not been released.
News of looming cuts at McKinsey comes less than a week after accountancy group KPMG announced it was culling close to 2 per cent of its staff — roughly 700 people — in the US, following a sharp slowdown in its consulting business.
The first of the Big Four accountancy firms to officially announce redundancies, KPMG had been struggling with the collapse in merger and acquisition activity, which hit its deal advisory business, as well as easing demand for IT and strategic consulting.
*This story has been amended since initial publication to correct the number of staff McKinsey has added over the past five years.