Major Consulting Firms Downsize as Companies Build Internal Strategy Teams

McKinsey, Bain, Boston Consulting Group, and other major strategy firms are cutting thousands of jobs as corporate clients increasingly turn to internal strategy teams. What started as a cost-cutting measure during economic uncertainty has evolved into a permanent shift in how companies approach strategic planning.

The trend accelerates a decade-long movement where large corporations have been building sophisticated internal consulting capabilities. Companies that once relied heavily on external advisors now prefer developing strategy expertise in-house, citing better institutional knowledge, faster execution, and significant cost savings.

The Great Consulting Contraction

McKinsey laid off approximately 2,000 employees globally in February, marking its largest workforce reduction in over a decade. The firm’s revenue dropped 15% year-over-year as Fortune 500 clients reduced consulting budgets. Boston Consulting Group followed with 1,300 layoffs, while Deloitte’s strategy division eliminated nearly 800 positions across its US operations.

The numbers tell a stark story about changing client preferences. Where companies once paid $500-800 per hour for senior consultants, they’re now investing those same dollars in hiring full-time strategy professionals at $150,000-250,000 annual salaries. The math works: a single BCG engagement costing $2 million could fund two senior strategy hires for an entire year.

European firms face similar pressures. Roland Berger reduced its workforce by 20% across major markets, while smaller boutique firms report project cancellations and delayed contracts. Even specialized practices like digital transformation consulting see clients building internal teams rather than extending external contracts.

Internal Teams Gain Corporate Favor

Companies prefer internal strategy teams for reasons beyond cost control. Google’s strategy team, built from former McKinsey and Bain consultants, developed the company’s cloud expansion strategy entirely in-house. The team’s deep understanding of Google’s culture and existing capabilities produced implementation plans that external consultants struggled to match.

Amazon’s internal strategy division has grown to over 300 professionals, handling everything from market entry decisions to acquisition analysis. The team operates with access to real-time operational data and direct relationships with business unit leaders – advantages that external consultants rarely enjoy.

Why the Shift Makes Business Sense

Internal strategy teams offer continuity that project-based consulting cannot match. When Netflix decided to expand into gaming, its internal strategy group had been tracking gaming trends for two years. An external consulting firm would have required months of industry research and company briefings before reaching the same analytical depth.

The knowledge retention factor proves equally important. External consultants often leave companies with impressive slide decks but limited institutional memory of decision-making processes. Internal teams build on previous analyses, understand what worked or failed in past initiatives, and maintain relationships with key stakeholders who execute strategic decisions.

Speed represents another decisive advantage. Microsoft’s internal strategy team can convene decision-makers within hours, access sensitive competitive intelligence, and iterate on strategic options in real-time. External consultants typically require weeks to schedule similar meetings and months to gain equivalent access to proprietary information.

The quality gap between internal and external strategic thinking has also narrowed considerably. Many corporate strategy teams now include former partners from major consulting firms who bring the same analytical frameworks and methodologies. These professionals often prefer the stability and deeper business engagement that internal roles provide over the travel-heavy, client-juggling demands of consulting life.