The recruitment outlook for MBA students aiming to join either McKinsey, Bain, or Boston Consulting Group — the elite MBB firms — is becoming increasingly uncertain.
MBB hiring strategies for Fall 2024 are likely to be more selective than ever before. The explosive growth in headcount seen just a couple of years ago has given way to a period of restructuring and a drop in new hires. Understanding the shifting dynamics of the consulting industry is crucial in strategizing your career moves and ensuring that the time-consuming application and interview preparation for MBB is worth it.
McKINSEY: DON’T EXPECT MANY OFFERS THIS YEAR
It seems like McKinsey is going to scale back its recruiting efforts, if not freeze hiring completely, in the U.S. for 2024.
If you haven’t been following recent news, here’s a recap:
- February 2023: McKinsey cut 2,000 jobs in back-office functions, later reducing the number to 1,400. (Reuters)
- February 2024: McKinsey issued warnings to 3,000 consultants regarding unsatisfactory performance, with a mandate to improve within 3 months. McKinsey claimed that 3,000 was within the typical range for performance reviews. (Bloomberg)
- March 2024: McKinsey offered 9 months’ pay to some UK consultants if they leave the Firm. (Bloomberg)
- April 2024: McKinsey announced plans to eliminate 360 jobs (including technical experts in design and cloud) in its software divisions. (Euronews)
In short, it appears that McKinsey has been restructuring its support functions and downsizing its consultant body by tightening performance reviews and encouraging voluntary departures. These actions might signal that the firm doesn’t have a healthy appetite for new hires in the near future.
NUMBER OF McKINSEY EMPLOYEES & McKINSEY REVENUE, 2020-2023
The explosive growth in 2020-21, when revenue surged by 25% in just one year, prompted McKinsey to start aggressive hiring. As a result, the firm’s staff ballooned by 30% in just two years (see above). However, judging by the flat revenue since 2021, this growth occurred without a corresponding increase in the number of consulting projects for them to join.
It’s no wonder, given numerous anecdotes, that the number of McKinsey consultants “on the beach” (not assigned to a client project) or engaged in internal projects has been unusually high for the past two years.
NUMBER OF CLIENT-SERVING EMPLOYEES AT McKINSEY U.S., 2019-2022
Global dynamics reflect hiring trends in the U.S. McKinsey tripled the number of newly hired consultants (“client-serving” staff) from 2020 to 2022, leading to a 60% boost in the U.S. consultant body within two years (see above). However, in 2023, McKinsey didn’t extend interview invitations to a single MBA student from over 10 top U.S. business schools for U.S. roles during the Fall recruiting cycle. Instead, students were only invited for roles in some international offices.
On a positive note, McKinsey did invite MBA students for interviews during their internship cycle in January 2024, but the number of invitations was 2-3 times lower based on my records.
If strategy consulting is your top priority, consider applying to McKinsey, but don’t bank on it. And if you aren’t invited, it doesn’t mean you are under-qualified; it means McKinsey is going through rough times.
BCG: LIKELY TO HIRE, BUT NOT A LOT
According to BCG’s CEO Christoph Schweizer, the consulting market “feels more positive” in 2024. Despite this optimistic outlook, it seems that BCG’s recruiting will be limited this year.
If you haven’t been following recent news, here’s a recap:
- April 2024: BCG is set to grow by 2,000 employees globally in 2024. Unfortunately, this is only a 6% increase in headcount, and most of these employees were already hired during the recruiting cycles in 2023. (Bloomberg)
- April 2024: In contrast to the sharp drop at McKinsey (from 20% to 15%), attrition at BCG remained in line with the 12-year average in 2023. In other words, BCG has been more aggressive in letting employees go. (Financial Times)
- April 2024: On a positive note, BCG’s sales grew by over 10% in Q1 2024 compared to Q1 2023. This growth gives hope that BCG will need more consultants soon to serve its expanding pool of projects. (Financial Times)
NUMBER OF BCG EMPLOYEES (2019-2024F) & BCG REVENUE (2019-2023)
Source: BCG 2023 ESG report, page 103 and 105; CEO’s statement
Similar to McKinsey, BCG was on a hiring spree in 2021-22, adding about 40% to its headcount in just two years (see above). However, the skyrocketing growth seen in 2020-21, when BCG’s revenue jumped by 28%, didn’t continue. In fact, BCG’s revenue has been flat since 2021, causing a drop in consultants’ utilization (WSJ) and stricter performance reviews to let go of more consultants (Financial Times), which might be considered “hidden layoffs.”
It comes as no surprise that BCG canceled its MBA recruiting cycles in the U.S. for full-time roles in Fall 2022 and Fall 2023, based on my records.
NUMBER OF NEW HIRES (2021-2023) AND % PROMOTIONS AT BCG GLOBALLY
Source: BCG 2023 ESG report, page 103; Financial Times
New hires usually receive their offers a year in advance (during the July-October recruiting cycles), so the 6,000 new employees in 2023 were hired in 2022 (see above). Keeping this in mind, the dynamics of new hires align with the revenue trajectory. BCG scaled back its recruiting efforts once the revenue flattened out.
The level of promotions skyrocketed in 2022 to accommodate the high influx of new hires and maintain the pyramid structure. However, the promotion rate fell to pre-pandemic levels in 2023. Coupled with the 30% drop in voluntary attrition (read: people aren’t leaving BCG due to an unwelcoming labor market) (Financial Times), this signals BCG’s limited appetite for bringing in new talent.
POSITIVE SIGNS
BCG’s annual growth accelerated to twice the rate in Q1 2024 (Financial Times), yielding over 10% compared to 5% in 2023. The expected cuts in interest rates by the U.S. Federal Reserve System in December 2024 should further propel BCG’s growth, fueling the firm’s demand for new hires. However, the major growth driver has been AI consulting, which is expected to generate 20% of BCG’s revenue in 2024 and 40% in 2026 (Financial Times). Thus, BCG’s recruitment has been shifting towards tech experts, with less focus on generalists like MBA students.
The upcoming Fall recruiting cycle might not offer many generalist spots at BCG. It’s still worth applying if getting an MBB job is your top priority but consider other career options as well.
BAIN LIKELY TO SHARPLY REDUCE HIRING IN 2024
Similar to McKinsey and BCG, Bain isn’t projecting much optimism for the upcoming Fall recruiting cycle. On top of that, considering that Bain represents only 20% of total MBB global headcount (19,000 out of 96,000), their hiring numbers are likely to be low in 2024.
Notable news in recent years:
- March 2024: Bain offered some consultants in their London office the option to depart with six-month pay or transfer to locations such as Johannesburg or Sydney (Bloomberg).
- July 2023: Bain’s Shanghai offices were raided by the government in a spy investigation, resulting in reputation damage that led to a sharp drop in business in China. Bain delayed starting dates for new China hires until 2025. (Financial Times)
- April 2023: Bain offered new MBA hires $40,000 to work for a nonprofit, $30,000 to learn a new language, or $20,000 for other purposes to delay their start dates to April 2024. (Business Insider)
- September 2022: Bain was banned from working for South Africa’s public sector until 2032 due to its involvement in a corruption scandal. The UK initially imposed a three-year ban on Bain as well but reversed the decision in March 2023 (Financial Times).
NUMBER OF BAIN EMPLOYEES GLOBALLY (2020-2023) & GLOBAL HEADCOUNT INCREASE FOR MBB (2020-23)
Source: ESG reports (Bain 2022 – page 54; BCG 2023 – page 103; McKinsey 2023 – page 67) and Forbes.
All MBB aggressively expanded in 2020-22; however, Bain significantly outpaced its peers. Even when considering only organic growth (Bain acquired six companies in 2022-23, adding 800 employees), Bain’s headcount surged by 50% in 2020-23 (see above).
In 2022-23 the market for consulting services was slow, leaving Bain with an excess of consultants relative to project demand. It’s no surprise that Bain started scaling back its recruiting efforts in 2023 (its global headcount barely changed in 2023).
The current challenging market conditions may impact Bain more severely than BCG or McKinsey, particularly because one of Bain’s major revenue drivers is its work with private equity firms. Deal-making by PE firms has dropped as interest rates have risen sharply around the globe in the past two years. Although the European Central Bank and the Bank of Canada reduced interest rates in early June 2024, the U.S. Federal Reserve System plans to maintain rates unchanged until at least December.
AVERAGE REVENUE PER EMPLOYEE (2021 VERSUS 2023) AND % PROMOTIONS (2019-23) AT BAIN GLOBALLY
Source: Bain’s revenue (Financial Times) and headcount (Forbes); ESG reports (BCG 2023, p.103-105; McKinsey 2023 p.67); Financial Times
Bain’s average revenue per employee is far lower than that of BCG or McKinsey (see above). Bain’s existing project portfolio can’t accommodate the current over-bloated headcount and it hurts Bain’s economics. To reach McKinsey’s level, Bain may need to lay off a whopping 2,000 employees, which is about 10% of its staff.
Naturally, the promotion rate fell off the cliff, indicating that Bain likely tightened its performance reviews to let more people go. (Also, if there are no plans to hire more consultants, fewer team leaders are needed.)
It seems like Bain might hire a limited number of consultants this Fall, if any at all. Last Fall, Bain cancelled its full-time recruiting for MBA students in the U.S., and a similar scenario may unfold on a larger scale this time around.
Peter K has been training candidates for their consulting case interviews since 2017. A former consultant for McKinsey and L.E.K. and senior executive at a $300M Zappos-like online marketplace, to date Peter has conducted 10,000 case prep sessions, assessed 3,000 candidates, authored three books, and launched the case prep portal, www.Peter-K.org.
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