In a stark recalibration of strategy and scale, McKinsey has laid off over 5,000 employees—more than 10% of its global workforce. It is the largest workforce reduction in the firm’s 98-year history, and a telling sign of the forces reshaping the consulting industry.
From 2018 to 2023, McKinsey rode the wave of post-pandemic transformation. The firm aggressively expanded its headcount—growing by nearly two-thirds—to meet the unprecedented demand for digital transformation, analytics, and large-scale project delivery. But that surge has since tapered. With a slowing global economy, client budgets under pressure, and the once-hot consulting pipeline cooling off, the firm is being forced to rethink its operating model.
The layoffs began in 2023 with 1,400 back-office roles, followed by a further 400 cuts to data and software engineering roles in 2024. But behind the headlines lies a deeper strategic shift. McKinsey has introduced tougher performance management systems, reportedly pushing underperformers to leave. Some mid-level staff were offered financial incentives—up to nine months of pay—to voluntarily exit.
Compounding matters is the firm’s legal entanglement in the opioid crisis. Having advised companies like Purdue Pharma on strategies to boost OxyContin sales, McKinsey has paid out $1.6 billion in settlements. Legal liabilities of this scale not only weigh on the balance sheet but on the firm’s brand equity, at a time when reputational risk carries a premium.
The broader consulting sector isn’t immune either. With attrition rates stabilising and fewer voluntary exits post-pandemic, firms that once grew to match surging demand are now resorting to blunt measures—layoffs—to stay lean. PwC, too, recently announced plans to cut 1,500 jobs in the US. The era of frenzied hiring appears to be winding down.
And yet, not all firms are faring equally. Rival Boston Consulting Group (BCG) recently posted a 10% revenue uptick and expanded its workforce to 33,000. It’s a striking contrast that underscores how differently firms are adapting to the new terrain.
At the heart of this shift is the spectre of automation and artificial intelligence. Prominent corporate figureheads like Paytm’s Vijay Shekhar Sharma were quick to attribute McKinsey’s layoffs to AI, quipping on social media, “There’s a new consultant in town… ChatGPT.”
While tongue-in-cheek, the remark captures a deeper truth: AI models—from ChatGPT to Claude to Gemini—are increasingly capable of handling tasks once reserved for top-tier consultants. Strategy memos, financial analyses, even client-facing solutions are being generated by machines faster, cheaper, and at scale.
Zoho’s CEO Sridhar Vembu echoed the alarm, warning of a coming productivity revolution that could “destroy a lot of software jobs.” His reflection: “Only the paranoid survive”—a nod to Intel’s Andy Grove—serves as a timely reminder that disruption rarely knocks; it kicks the door open.
Yet McKinsey insists the firm is not in retreat. A spokesperson reiterated that hiring will continue “in strategic areas,” and that the company is “doing more impactful work, in more ways, than ever.” But the message is clear: growth today must be more discerning.
The consulting industry, once a bastion of stability and prestige, is being reshaped by a volatile mix of economic headwinds, legal accountability, and technological upheaval. In this new era, legacy alone offers no immunity. Firms must not only adapt, but reinvent—before their business models, too, are out-consulted by code.
