Consulting firm McKinsey & Co is reportedly set to lay off around 2,000 employees in a massive cost-cutting move, according to sources cited by Bloomberg News on Tuesday. The layoffs are expected to affect support staff who are not in direct contact with clients, as the company seeks to centralize some of its roles and redesign the way non-client-serving teams operate. The move comes as part of Project Magnolia, an initiative aimed at preserving the compensation pool for partners of the firm.
Redesigning Non-Client-Serving Teams for the First Time in a Decade
A spokesperson for the company confirmed the layoffs, stating that McKinsey is “redesigning the way our non-client-serving teams operate for the first time in more than a decade, so that these teams can effectively support and scale with our firm.” While the company has yet to provide an official statement on the matter, the layoffs are part of a larger restructuring effort aimed at streamlining operations and cutting costs.
Focus on Support Staff
According to the report, the layoffs are expected to affect support staff who are not in direct contact with clients of the firm. This includes administrative and back-office roles that are not deemed essential to the company’s core operations. The move is part of a larger effort by the firm to reduce costs and improve efficiency.
Project Magnolia
The layoffs are part of a larger initiative called Project Magnolia, which aims to centralize some of the roles within the company’s support teams. The project is aimed at preserving the compensation pool for partners of the firm, who have seen their pay cut in recent years due to a decline in revenue. The layoffs are expected to help the firm cut costs and improve its profitability.
Other Consulting Firms Also Cutting Jobs
McKinsey is not the only consulting firm that has been hit by the pandemic-induced economic slowdown. KPMG, one of the world’s four largest accountancy firms, is also cutting close to 2% of its workforce in the United States, according to a report by the Financial Times. The move makes KPMG the first of the Big Four accounting firms to slash jobs in the country.
Decision as Part of Larger Restructuring Effort
The pandemic-induced economic slowdown has hit the consulting industry hard, with many firms facing declining revenue and reduced demand for their services. McKinsey & Co’s decision to lay off 2,000 employees is part of a larger restructuring effort aimed at cutting costs and improving efficiency. The move is expected to focus on support staff who are not in direct contact with clients, as the company seeks to centralize some of its roles and redesign the way non-client-serving teams operate.
