00:00Partners at consulting giant McKinsey are discussing job cuts at their own firm, and it could be in the number of thousands of employees.
00:09Leadership could cut staff as much as 10 percent across non-client facing departments over the next two years as revenue growth flatlines.
00:17Bloomberg's Wall Street chief correspondent Sridhar Nadirajan reported on this and joins us now.
00:22So McKinsey, you know, typically the one to say you should cut jobs at your firm, now looking to slim down itself.
00:28All right. So it's a window into the challenging period that the consulting industry overall is facing.
00:33This is not a McKinsey only issue. And you have to be mindful of the fact that in the prior decade, McKinsey had really grown its headcount quite a bit.
00:41However, we've seen a little bit of flatlining in their revenue over the last five years.
00:46And that is why, despite the bravado in front of the partners where their global managing partners, Bob Sternfels,
00:52was just recently talking about this idea that they're ready to kick some ass,
00:55that those who believe in this mission will see good times ahead,
00:59that there is a more pragmatic message percolating through the entire firm.
01:04And that is it is time to get leaner.
01:06And they rightly point out one of their spokesmen actually tells us that much as they advise their own clients,
01:12they realize there is a need to force some efficiency, especially in their support functions.
01:17I saw in your story from 2012 to 2022, they've gone from 17,000 at one point to 45,000 employees.
01:23So beefing up massively at the same time.
01:26Well, now, as a lot of consultancies, a lot of law firms, a lot of banks are saying,
01:34we don't necessarily need to hire as many first year employees because AI can do all of this work for them.
01:39And it is notable that they themselves, in their own statement, flick at the idea that AI is having profound impacts on business and society.
01:47And yes, that is why, even in the last two years, you've seen McKinsey's headcount go from 45,000 to 40,000.
01:52So it will be interesting to see where the headcount actually ends up in five years from now.
01:56These things never move in a straight line.
01:58The last time around, they had a big round of job cuts.
02:01They called it Project Magnolia internally.
02:03They said about 1,400 jobs will be lost.
02:04That would be two years ago.
02:05But when we hear 2025, end of 2025, the headcount reduction, actually, the net reduction is down 5,000.
02:12So that could well be tapping some consultants on the shoulders and saying, time to get out, not hiring as many.
02:18So because of all the changes ahead of us, challenges faced by the consulting industry,
02:23and rightly what you point out when they look at their clients and whether the changes you're seeing at law firms,
02:28even banks at the initial stages, at the junior stages, how will the consulting firms react to that?
02:34And how does McKinsey, the flag bearer of that industry, react to that?
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