McKinsey initiates job cuts amid demand slowdown
NEW YORK, UNITED STATES — Consulting giant McKinsey & Co. had started the termination of approximately 360 positions globally. This move comes as a response to a deceleration in client demand for its services.
The layoffs will predominantly affect the firm’s specialist divisions, including design, data engineering, cloud services, and software.
Technical staff bearing the brunt
The job cuts are expected to affect about 3% of the firm’s 12,000 technical specialists, who provide support to McKinsey’s traditional consultants.
In an email to Bloomberg, a spokesperson for McKinsey stated, “We invest to grow capabilities that match our clients’ priorities and adjust the size of a small number of others as appropriate. As part of this process, some roles will be eliminated within this small number of capabilities.”
However, the firm clarified that these job reductions will not impact their traditional consultants.
Firm’s global presence and challenges
McKinsey, with a workforce exceeding 45,000 across 130 cities, has faced significant political scrutiny in the U.S. due to its engagements in Saudi Arabia and China.
The firm’s clientele is diverse, including entities like the U.S. Pentagon and China’s Ping An Insurance (Group) Co.
The industry-wide trend of cutbacks
As a global management consulting firm, McKinsey played a pivotal role in shaping the outsourcing industry, particularly through its extensive research and strategic insights. The firm also advises companies on outsourcing strategies but does not directly offer outsourcing services themselves.
However, the consulting industry is witnessing a shift from the hiring surges experienced during the pandemic to a phase where firms are resorting to job cuts.
Clients are deferring long-term investments, leading to reduced spending on consulting services. Technology services and consulting firm Accenture also experienced a downturn as its financial services clients reduced software expenditure.
Despite generating a record $16 billion in revenue last year, McKinsey issued performance improvement warnings to about 3,000 consultants. Additionally, the company proposed a severance package to its employees in the United Kingdom, offering nine months’ pay for voluntary departures.
