McKinsey Considers Thousands of Job Cuts as AI Reshapes Consulting Work

McKinsey & Company is thinking about laying off thousands of employees in response to the quick development of artificial intelligence. According to reports, senior executives at the company have discussed plans to cut staff in several non-client-facing divisions by roughly 10%. This might result in several thousand layoffs over the course of the next 18 to 24 months.

There have reportedly been no final decisions made regarding the extent of the reductions or which countries would be impacted, and the talks are reportedly in their early stages. According to Bloomberg, which broke the story first, the changes would not be implemented all at once but would instead be spread out over time. As the company neared its centenary, a McKinsey representative stated the company was examining its operations.

According to the company's spokesman, the company is celebrating its 100th year of operation and is doing so at a time when fast advancements in artificial intelligence are changing both business and society. McKinsey & Company is working to increase the efficacy and efficiency of its support operations, just as it is collaborating with clients to develop their organisations.

Sternfels Already Signaled About Layoffs Earlier

McKinsey's worldwide managing partner, Bob Sternfels, had already hinted at the possibility of more cutbacks. While continuing to hire consultants who deal directly with clients, he stated in a September television interview that the firm would likely have fewer employees in non-client-deployed sectors in the future. This year, the company has already cut staff. Last month, it eliminated about 200 IT workers worldwide as it began utilising AI to automate some tasks. AI raises broader concerns about the nature of employment in the future, which could result in job losses.

The results of research on AI's effects have been mixed, with some studies indicating that the technology will have little to no influence on employment and others warning that tens of millions of jobs may be destroyed. According to a recent BearingPoint survey, as AI-driven automation is implemented, about half of executives think their companies have between 10% and 19% extra capacity.

Consulting businesses are responding to these developments and offering advice. McKinsey and competitors like KPMG, Bain, Boston Consulting Group, and PricewaterhouseCoopers have implemented internal AI-powered assistants that are already gaining a lot of traction, according to a September Harvard Business Review story. The proposals for layoffs at McKinsey coincide with a downturn in the growth of the consulting sector as a whole.

McKinsey & Company’s Financial Dynamics and Operations

Over the last five years, McKinsey's yearly revenue has stayed relatively stable at between $15 billion and $16 billion. Meanwhile, its Big Four competitors, Deloitte, EY, KPMG, and PwC, have similarly reduced staff when revenue growth halted. James McKinsey, an accounting professor at the University of Chicago, started McKinsey in 1926 to provide cost-cutting advice to businesses.

The company started out as a local meatpacker's advisor and has now expanded to become a major player in the global economy, offering advice to businesses on everything from decreasing costs to entering new markets and using new technology. Major firms like Coca-Cola and Goldman Sachs, as well as governments worldwide, are among its clientele. McKinsey went on a massive hiring binge between 2012 and 2022, growing its global workforce from roughly 17,000 to 45,000 employees. After a series of layoffs in 2023, that number has subsequently dropped to about 40,000.