Consulting giant McKinsey to cut about 2,000 jobs in one of its biggest rounds of layoffs: Sources

The consulting giant known for devising staff-reduction plans for its clients is taking the ax to some of its own. PHOTO: REUTERS

NEW YORK - McKinsey & Co plans to eliminate about 2,000 jobs, in one of the consulting giant’s biggest rounds of cuts.

The company, known for devising staff reduction plans for its clients, is taking the axe to some of its own, with the move expected to focus on support staff in roles that do not have direct contact with clients, according to people with knowledge of the matter.

Under a plan dubbed Project Magnolia, the management team is hoping the move will help preserve the compensation pool for its partners, the sources said.

The company, which has seen rapid growth in its headcount during the past decade, is looking to restructure how it organises its support teams to centralise some of the roles.

The plan is expected to be finalised in the coming weeks, and the final number of roles to be eliminated from its 45,000 workforce could still change, one of the sources said.

That headcount is up from 28,000 just five years ago and 17,000 in 2012.

“We are 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,” Mr D.J. Carella, a company representative, said in an e-mail statement.

He said the company is still hiring professionals who deal directly with clients.

The company posted a record US$15 billion (S$20 billion) in revenue in 2021, and surpassed that figure in 2022, one of the sources said.

McKinsey consultants helped popularise the phrase “War for Talent” in the late 1990s, a slogan that has come back into vogue as the post-pandemic boom led to a frenzied period of hiring and headcount expansion across industries.

With that growth now starting to wane, companies battling to preserve profits are turning to job cuts at a scale not seen in more than a decade.

Companies in industries ranging from finance to technology to retailing are reducing staff amid a slowdown in demand and predictions of a looming recession.

Tech giants including Amazon.com and Microsoft have announced plans for deep cuts, and Goldman Sachs Group, Morgan Stanley and other top banks have been eliminating thousands of positions.

McKinsey’s move comes two years after Mr Bob Sternfels took over as global managing partner following a vote by its roughly 650 senior partners to oust his predecessor Kevin Sneader.

The management shift was the culmination of a tumultuous period for the company. McKinsey agreed in 2022 to settle claims that it fuelled an epidemic of opioid addiction through its work for bankrupt OxyContin maker Purdue Pharma and other drug companies.

Mr Sneader now helps run Goldman Sachs Group’s Asia-Pacific operations. BLOOMBERG

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