The consulting industry saw a surge in business resulting from the sudden changes required by the COVID-19 pandemic and the following boom as new vaccines and therapeutics began to loosen its hold on the world, with many firms posting record revenues and moving aggressively to acquire and retain top talent. Now, with record inflation dragging down margins and the global economy teetering on the edge of recession, many companies are pulling back on their growth plans and reducing their workforces in preparation for tough times ahead. Global consulting firm McKinsey & Company (McKinsey) is the latest large company to announce cuts, which could end employment for as many as 2,000 back-office staff.
McKinsey confirmed to Bloomberg 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.
While the exact number of jobs to be trimmed is yet to be determined, it could range from several hundred to a couple of thousand roles, according to a person directly familiar with the situation. The restructuring would impact non-client-facing teams such as technology, communications, and human resources, though the firm’s legal and compliance teams, which saw a surge in hiring in the wake of several scandals, will not be affected. McKinsey has already slowed down its hiring of back-office staff, though it plans to continue hiring client-serving professionals, having added 17,000 staff over the past five years to its global workforce of 45,000, with over half being in client-facing roles.
McKinsey is the second consulting firm to announce job cuts, coming a week after Big Four firm KPMG announced its reduction of close to 2% of its staff, nearly 700 people, in the U.S., following a sharp downturn in its consulting business. The reduction of merger and acquisition activity has made a strong impact on its deal advisory business, and cooling demand for IT and strategic consulting has compounded the firm’s need to trim costs. With consulting businesses having spent the past two years significantly boosting starting compensation in the face of booming demand and a tight labor market, additional firms could potentially announce their own cuts in the near future.