Consulting giant McKinsey plans to layoff 2,000 employees
McKinsey & Company is known for devising plans for its clients to cut their employees. Now, it seems the management consultancy is conceiving a plan to cut its own employees. Per Bloomberg, the firm plans to axe 2,000 employees. This will be the company's biggest round of layoffs yet. Earlier this month, KPMG, another consultancy firm, fired around 700 staffers.
Why does this story matter?
Consultancy firms have been hit by the lack of merger and acquisition activity. With the corporate world choosing austerity over prosperity owing to the uncertain economic climate, consultancy companies are struggling to find new clients and deals. Add to that the challenge of retaining old clients. Budgetary constraints have become the norm at top consultancies, making restructuring a necessity.
McKinsey's restructuring plan is called 'Project Magnolia'
MicKinsey's job cuts are expected to affect employees in roles that don't have direct contact with clients. Mostly administrative staff and the ilk. The company has named its restructuring plan 'Project Magnolia.' Under the project, the firm hopes terminations will help preserve the compensation pool for partners. The plan will be finalized in the coming weeks, and the number could still change.
The firm's headcount has increased manifolds in the recent years
The firm's headcount has increased rapidly in the last decade. In 2012, McKinsey had 17,000 employees. By 2017, it was 28,000. The company currently has 45,000 staffers, a massive 17,000 increase from five years ago. The restructuring is aimed at changing how the firm's "non-client-serving teams operate for the first time in more than a decade," said a company representative.
Layoffs come 2 years after leadership change
McKinsey's decision to cut jobs comes two years after the firm's senior partners voted to oust then-global managing partner Kevin Sneader. He was replaced by Bob Sternfels. During Sneader's reign, the firm came under scrutiny for its role in advising Purdue Pharma with sales of OxyContin, an addictive painkiller. The company agreed to pay $641 million to settle claims and issued a rare apology.
Silicon Valley and Wall Street have been hit by layoffs
There has been plenty of layoffs in the technology and finance sectors. From tech giants such as Alphabet, Microsoft, and Meta to financial titans including Goldman Sachs and Morgan Stanley, have laid off employees. With macroeconomic headwinds refusing to give way, it is not far-fetched to think that Silicon Valley and Wall Street are not done with job cuts.
