McKinsey to lay off hundreds of employees as consulting work dries up

The layoffs reportedly drew criticism from some senior partners, who accused Bob Sternfels of mismanaging the process. Photo: Al Drago/Bloomberg

McKinsey plans to lay off hundreds of employees as the consulting giant grapples with falling demand for its services.

The management consultancy is preparing for 360 cuts across its engineering, data science, cloud technologies and software.

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McKinsey's layoffs will affect about 3% of the 12,000 employees in the company's global offices who are considered specialists or have technical knowledge.

The job cuts will not impact the company's traditional advisory functions. This was first reported by Bloomberg.

A McKinsey spokesman said: “We are investing in developing capabilities that align with our clients' priorities and adjusting the size of a small number of others as needed.

“As part of this process, some roles will be excluded from this small number of opportunities. We will provide support to departing colleagues both during and after their transition.”

The cuts come as McKinsey faces pressure to maintain profits as well as demand for services as cash-strapped clients cut spending on projects.

This has led to consulting firms becoming overstaffed as the number of employees choosing to leave has dropped sharply.

The U.S. business employs about 45,000 people in 65 countries, a number that grew 60% from 28,000 in 2018. .

Recent downsizing efforts include a voluntary notice period scheme targeting consultants in McKinsey's UK and US offices.

Under the scheme, UK employees can spend nine months looking for new jobs, earning full pay.

This follows steep job cuts in one of the largest restructurings in McKinsey's 98-year history, dubbed Project Magnolia.

An overhaul announced last year saw 1,400 jobs cut across back office and support functions, including human resources and communications. and IT.

The layoffs reportedly drew criticism from the firm's 750 senior partners, who accused Bob Sternfels, the firm's global managing partner, of mismanaging the process.

McKinsey, which recorded revenue $16bn (£13bn) last year is often sought after by companies and governments seeking help with their toughest problems.

However, the company has since warned 3,000 consultants that their work was unsatisfactory and its needs to be improved. improve.

Underperforming employees typically have three months to improve their performance before they are advised to leave the business altogether.

The slowdown has also forced McKinsey to cut the number of new people it hires. appointed to the partnership. and defer affiliate bonuses.