McKinsey & Co., the business strategy consulting firm that has long advised CEOs and Fortune 500s on how to “streamline” their workforces, is now preparing to cut its own workforce.
The company is planning deep cuts across its non-client-facing staff, Bloomberg reports, as much as 10% of headcount within some areas, a move that could eliminate several thousand jobs over the next 18 to 24 months.
The job cuts come at a moment of simultaneous growth and contraction for the consulting industry. After a multi-year hiring spree that pushed McKinsey’s workforce above 45,000, revenue growth has stalled. The firm now employs closer to 40,000 people, and utilization rates across the industry have reportedly sagged as corporate clients trim budgets, delay projects, and opt for automation and AI over consulting services.
But AI has also opened up consulting opportunities as major firms advise the globe's biggest companies on how to integrate the new technology — making it difficult to get a precise read on the overall consulting industry's state.
McKinsey layoffs echo the industry trend
Accenture $ACN, KPMG, Pricewaterhouse Cooper, and Ernst & Young, among other tax and strategy consulting firms, have all announced waves of layoffs since 2023. So have Deloitte, Bain & Company, and many smaller firms. EY's own research and analysis recently said that "businesses are expected to scale back hiring and execute targeted layoffs to manage rising input costs, especially those driven by tariffs."
McKinsey’s move lands with particular symbolic weight because of the firm’s cultural role in white-collar America. When McKinsey — an emblem of elite professions — lays off workers, it often means the larger white-collar labor cycle has turned negative.
A backdrop darker than any single firm’s restructuring
Fed Chair Jerome Powell warned last week that the U.S. job market may already be contracting, not growing, thanks to long-running problems in the Bureau of Labor Statistics' “birth-death” model that may be overstating hiring by as much as 60,000 jobs a month. If Powell’s math is right, the U.S. could be losing about 20,000 jobs a month — a far more serious slowdown than headline figures have suggested in recent months.
All of this makes Tuesday’s long-delayed "double" jobs report unusually significant. It’s the first full public labor market reading since the record-long government shutdown ended last month, and economists are watching to see whether significant revisions confirm — or contradict — the contraction that private data and Powell himself have pointed to.
Powell described conditions as “a little bit curious,” in that media coverage of layoffs at major corporations have dominated headlines while unemployment rolls haven't yet ballooned. The result is a kind of white-collar recession hiding in plain sight, with fewer openings, shrinking admin support teams, and more firms announcing plans to use AI to take over work once done by analysts, researchers, and other internal operations staff.
Weak jobs report could send stocks higher
Some market analysts expect a weaker jobs report could nevertheless power the stock market to fresh highs because such data would increase the likelihood of further interest rate cuts.
Powell has cited a weakening labor market as the prime reason for late 2025’s series of rate reductions. At present, the Fed's own projections suggest just one rate cut coming in 2026. But continued deterioration in jobs numbers could prompt more drastic action.