Bloomberg reported on the 15th that McKinsey pulled out a knife as the industry fell into a recession due to the rapid rise of artificial intelligence (AI) and cost-cutting by customers.
Over the next year and a half to two years, the job cuts will cover thousands of people, about 10% of the workforce in the non-face-to-face support department.
Long-term growth stagnation is the biggest reason. McKinsey’s annual sales have remained at $15 billion to $16 billion over the past five years. During the COVID-19 pandemic, consulting demand exploded, increasing the number of employees from 17,000 in 2012 to 45,000, but after the end of the crisis, companies and the government tightened their belts, which was directly hit.
The rise of AI is also a key factor in restructuring. “We are on the journey to improve the efficiency of support functions in line with the era when AI is changing business environment and society,” McKinsey said.
In fact, McKinsey has been using AI to automate some tasks over the past few months, reducing 200 technical workers and developing its own AI platform, Lilli, to speed up technology transformation.
McKinsey’s crisis shows the reality facing the consulting industry as a whole. Customers now demand a professional and immediate solution to a particular problem rather than extensive advice. As a result, competitors such as Accenture, PwC, and EY have also cut jobs.
The external environment is also challenging. In the United States, President Donald Trump is continuously reducing the government’s consulting costs, and the Chinese government is implementing a policy to foster its own consulting firms, excluding foreign companies.
Saudi Arabia, which previously paid more than $500 million a year as McKinsey’s biggest customer, also drastically reduced its consulting costs.
McKinsey & Co. said, “Even if we reduce the number of applicants, we will continue to increase the number of consultants who can communicate directly with customers.” It aims to foster professionals who create higher added value by utilizing AI.
McKinsey was founded in 1926 by James McKinsey, a professor of accounting at the University of Chicago. Initially a small company providing advice to local meat processing companies, McKinsey has grown into the world’s largest consulting firm with large companies such as Coca-Cola and Goldman Sachs as customers and governments.
SAM KIM
US ASIA JOURNAL
