McKinsey's waves of layoffs: the business consulting firm persists with its cost-reduction measures
Global Management Consulting Firm McKinsey & Company has executed one of the largest workforce reductions in its nearly century-long history over the past 18 months. Approximately 5,000 employees, equating to around 10% of its global workforce, have been let go. The company's headcount has decreased from around 45,100 employees at the end of 2023 to about 40,000 in mid-2025[1][3][5].
This significant downsizing represents a reversal of McKinsey's post-COVID-19 pandemic growth spree, which saw the firm expand from 34,000 employees in 2020 to over 45,000 by 2023[1][5]. The firm's decision to reduce staff is primarily attributed to slower growth in revenue following the pandemic boom, necessitated by changed economic conditions[4][5].
McKinsey's reduction has been characterized more as a result of its stringent performance management system rather than traditional layoffs. In February 2024, around 3,000 employees were issued performanceevaluations, signaling a three-month period to improve or face counseling to leave[1][3]. The firm reported that these performance-driven separations, coupled with normal attrition, accounted for a substantial portion of the headcount reduction[1][3].
Additionally, McKinsey initiated a restructuring exercise, leading to the elimination of approximately 1,400 back-office roles and around 400 data specialists and software engineers[5]. This deliberate streamlining of roles, especially in support and technical functions, is aimed at improving efficiency[5].
The consulting giant has also faced costly legal challenges, notably a $1.6 billion settlement related to its work with opioid manufacturers. These external factors have added pressure on the firm’s financial and operational strategies[3][5].
Industry observers suggest that the rise of AI technologies such as ChatGPT might be influencing McKinsey’s decision to reduce headcount, as automation and AI potentially decrease the need for some consulting roles[3][4]. To ease the transition, McKinsey UK reportedly offered senior staff career coaching, up to nine months’ pay, and voluntary resignation incentives in April 2024[5].
Germany's CEO, Fabian Billing, described 2024 as "one of the strongest years of the last decade" in an interview with the Handelsblatt, but did not provide any specific figures[6].
What could be the potential impacts of AI technologies like ChatGPT on the business, finance, and industry sectors, especially in consulting roles?
With McKinsey & Company's stringent performance management system, industry-wide speculation regarding the role of AI technologies in reducing headcount has arisen.
