McKinsey marks centenary with cuts as experts warn of consulting crash

The company has shed workers and suffered blows to its reputation but it is not the only big incumbent to fall out of favour in the industry, writes Matthew Bishop

- Matthew Bishop

As McKinsey approaches its 100th birthday, huge questions hang over the future of the blue-chip consulting company. “We will kick some ass as we start our second century,” managing partner Bob Sternfels promised a gathering of partners and VIP guests, including Oprah Winfrey, at a centennial celebration in Chicago in October.

But his attention has quickly turned to kicking out his coworkers. According to reports last week, the firm is preparing to shed several thousand jobs in the next 18-24 months, following several years of flat - and now possibly falling - revenues.

McKinsey is not alone in its struggles. Fellow leading strategy consultancies Bain & Company and Boston Consulting Group (BCG) have also been trimming staff, mostly through attrition, while the big global professional services firms that offer consulting, such as PwC, KPMG, EY and Accenture, have been through rounds of layoffs, with Accenture alone shedding 22,000 jobs this year, including 11,000 in the most recent quarter.

Indeed, McKinsey has already been quietly cutting its workforce, which had expanded rapidly in the years before Covid. From a peak of 45,000 employees in 2022, the total may already be down to 36,000, says James O'Dowd of Patrick Morgan, a professional services talent advisory firm. This wave of cuts is prompting dire predictions of a coming consulting crash, as fundamental problems with the traditional consulting business model are compounded by the current boom in artificial intelligence. Consultants themselves, who have never seen a new business trend they didn't think they could make money from, are more inclined to talk of AI as a massive opportunity, at least in public, though how they see the downside risks privately is another matter.