McKinsey, is set to lay off hundreds of employees across various divisions as it grapples with dwindling demand for its services.

In response to weaker demand for its management consulting services, McKinsey & Company is preparing to lay off approximately 360 employees across its design, data engineering, cloud, and software divisions. The job cuts will impact around 3% of the firm's global workforce of 12,000, consisting of specialists and technical experts, while traditional consultant roles remain unaffected, Bloomberg initially reported.

The decision to reduce staff comes as McKinsey faces increasing pressure to maintain profitability amidst reduced spending by cash-strapped clients. The consultancy industry has seen a surge in overstaffing, with a sharp decline in voluntary departures exacerbating the situation. McKinsey's global workforce has grown by 60% since 2018, expanding from 28,000 to approximately 45,000 employees across 65 countries.

Efforts to streamline operations and reduce headcount have included voluntary notice period schemes in the UK and US, allowing employees to search for new job opportunities while receiving full pay for up to nine months. These measures follow significant job losses under Project Magnolia, one of the largest restructuring initiatives in McKinsey's 98-year history, which eliminated 1,400 roles in back-office and support functions, including human resources, communications, and IT.

The downturn in demand has also compelled McKinsey to reduce the number of new promotions to its partnership and defer partner bonuses, reflecting the broader challenges facing the consultancy industry. As McKinsey navigates these turbulent times, the company's actions underscore the pressures facing even the most established firms in an evolving business landscape.