McKinsey, the consultancy that regularly advises companies on cost cutting, is taking its own advice and developing plans that could result in thousands more job cuts over the next two years in response to “rapid advances in artificial intelligence.”
Senior partners at the international management consultancy, which has steadily reduced its global workforce in recent years, have reportedly held initial talks with heads of non-client-facing departments with a view to reducing their teams by up to 10 per cent.
A McKinsey spokesperson would not confirm how many positions were at risk, but Bloomberg, who first reported the plansestimates there could be “a few thousand” layoffs staggered over the next 18 to 24 months.
“As as our company celebrates its 100th anniversary, we operate in an era marked by rapid advancements in AI that transform businesses and society,” the spokesperson said. “Just as we partner with customers to strengthen their organizations, we are on our own journey to improve the effectiveness and efficiency of our support functions.”
McKinsey is one of the world’s leading consulting firms, advising companies on everything from implementing new technologies to entering new markets and reducing costs. It counts among them blue-chip companies including Coca-Cola, Microsoft, Goldman Sachs and numerous governments.
Cutting jobs is often the method of choice by McKinsey and its consulting competitors when trying to “trim the fat” from clients’ cost bases. McKinsey conducted an intense recruitment campaign between 2012 and 2022, during which its global workforce grew from 17,000 to 45,000 people. It has since fallen back to around 40,000 people after a previous round of layoffs in 2023. About half of its staff are in non-customer-facing or back-office roles.
Bob Sternfels, the firm’s global managing partner, laid the groundwork for further job cuts in a television interview in September, when he acknowledged that McKinsey “would likely have fewer staff in non-client deployed areas” of the firm in the future.
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“We continue to recruit customer deployed people and we see an ever-increasing need in this area and we are currently aggressive in the market to try to expand that,” Sternfels, 55, said. “But we are rethinking our center operations by taking advantage of all these new technologies.”
Others have reached the same conclusion about how new technologies are changing the need for human workers, particularly in back-office roles. Marc Benioff, the head of Salesforce, the software company, said in August that it had cut 4,000 of its customer support jobs because “I need fewer heads”, while Klarna, the buy now, pay later company, effectively cut its workforce in half and replaced them with AI.
At McKinsey, it is understood that discussions about reducing its support teams are still in their early stages and no final decisions have been made on the scale of the elimination or which countries will be most affected. McKinsey employs 2,000 people in the UK, some of whom will be considered “non-client facing”.
The need to streamline operations reflects improvements in technology, but also partly in response to an industry-wide slowdown in client demand for advice over the past two years. Companies, wary of geopolitical and economic uncertainty, have reduced their spending on consultants, after investing heavily immediately after the pandemic.
McKinsey’s big four rivals, Deloitte, EY, KPMG and PwC, have all seen their revenue growth stagnate in recent times and have reduced their workforces accordingly. McKinsey’s annual revenue has stagnated between $15 billion and $16 billion over the past five years, although Sternfels, at the firm’s annual partners meeting in Chicago in October, said he was more optimistic about future growth.