McKinsey Cuts Staff in Historic Move as AI Reshapes Consulting World

McKinsey has shed over 10% of its workforce in the last year and a half. Employee numbers dropped from about 45,100 at 2023's end to around 40,000 now. Big change. It's probably one of the largest cuts they've faced since starting nearly a century ago.

Two things seem to be driving this shift:

• Pandemic consulting boom ending
• AI tech rising fast

COVID created this crazy demand surge. McKinsey grew like wildfire - nearly two-thirds larger in just five years leading to 2023. They started doing way more than just advising. Implementation projects became a thing. The whole industry expanded.

That golden era? Over now. People aren't quitting professional services firms like they used to. Retention rates are weirdly high. Kind of surprising how McKinsey responded - they've gotten tougher with mid-year reviews. Pushing underperformers out. Harsh but effective.

AI is changing everything too. The basic stuff junior consultants used to do? Machines handle it now. Data analysis, reports - all getting automated. The consultants who remain can do more with AI help. McKinsey admits it: "Generative AI has brought new levels of productivity to our team."

What's happening with AI isn't entirely clear, but seems like:

1. Routine work gets automated, fewer people needed
2. AI makes data work faster, generates insights
3. Entry-level jobs disappearing, more need for AI experts and big-picture thinkers

Not everyone's following McKinsey's playbook. BCG seems fine - growing 10% this year to $13.5 billion, added about 1,000 new people. They're at 33,000 now.

EY's taking a different path. Their global CEO Janet Truncale isn't cutting jobs because of AI. She thinks they can "achieve double growth with our current workforce size." Bold claim.

Different firms, different bets. The consulting world is changing fast. Post-pandemic reality looks nothing like before. Some adapt by cutting, others by growing. We'll see who's right.