McKinsey & Company to cut approximately 2,000 jobs

Consulting firm McKinsey & Company plans lay off approximately 2,000 employees, Bloomberg reported on Tuesday.

Anonymous sources within McKinsey told Bloomberg the New York-headquartered consultancy will focus layoffs on support staff in non-client-facing roles. Some of the functions that could be affected include human resources, IT, and communications – though legal and compliance is expected to be spared.

The staff reduction is part of “Project Magnolia,” which aims to preserve the compensation pool for McKinsey partners, sources said. The Big Three strategy firm has expanded its headcount rapidly in the past decade, reaching 45,000 people worldwide – up from 28,000 five years ago and 17,000 in 2012.

The consulting firm will now look to restructure how it organizes its support teams, as well as centralize some of the roles.

“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,” DJ Carella, a McKinsey representative, told Bloomberg.

The layoff of 2,000 people would represent one of the firm’s largest cuts in history. Sources said McKinsey will finalize its downsizing plan in the coming weeks, including the final tally for layoffs.

McKinsey joins a growing wave of financial services and technology firms that are cutting jobs after a frenzied hiring spree in the post-pandemic economic boom. As growth has slowed, banks such as Goldman Sachs and Morgan Stanley and tech firms including Amazon and Microsoft have announced deep workforce cuts.

Consulting firms also went on hiring sprees since 2021, looking to meet surging client demand for IT consulting, strategy work, and transaction services. With demand cooling in those areas, KPMG was the first of the large consultancies to announce layoffs last week.