Two of the Big Three consulting firms, McKinsey & Co. and Bain & Co., are putting off start dates for new MBA hires, and in some cases, paying dividends to make sure graduates don’t seek out other opportunities instead. Boston Consulting Group has also staggered start dates from June 2023 through January 2024.
Consulting is the number one destination for MBAs, and the most lucrative. For elite firms to take the extraordinary step of delaying start dates up to a year is a signal that they’re losing confidence in the economy.
MBA students shared offer letters from Bain with The Wall Street Journal. The letters included multiple exclamation points and encouragement to seek out their passions, with suggestions to “Go on an African safari or take a painting class!!” or “Write a book or become a yoga instructor!!” In exchange for delaying their start date until April 2024, new Bain hires could receive cash payouts between $20,000 and $40,000 depending on what the they choose to spend their year doing.
Meanwhile, the students who received offer letters from McKinsey have no start dates, though the company released a statement that new hires would be staggered from just after graduation through February 2024. This is despite the fact that the company is cutting an estimated 2,000 jobs this year, though most of those will be in “non-client-facing roles.”
Just two years ago, nearly two-thirds of consulting firms were complaining about being short-staffed. The pandemic forced companies in nearly every industry to pivot and adapt in some way to the economic and social upheavals, spurring a boom in consulting services.
It appears the boom has busted. Ernst & Young LLP announced last week that it would cut about 3,000 US jobs. Earlier this year, it was reported KPMG was cutting almost 1,000 employees between the US and Australia, and across the board, job postings by the largest consulting firms were significantly down.
“The fact that the top consulting firms are reducing existing headcount and delaying start dates for Class of 2023 MBA graduates into 2024 does suggest that the firms are expecting slower growth in the next nine months,” says Eliot Ingram, Clear Admit co-founder. “Given the uncertainty of the job start date, it would not be surprising to me if some top MBA graduates seek other jobs while they wait for the start dates to begin. It will also be interesting to see how the delayed start dates impact the Fall 2023 recruiting cycle for the MBA Class of 2024.”
Indeed, a confluence of factors may spell trouble for the next two years of MBA classes. During the pandemic, a surge in demand for MBA degrees led to oversized classes, and now with fewer companies recruiting for tech jobs, even more MBAs are likely to gravitate toward consulting. Many economists predict a looming recession, coupled with a predictable decline in jobs as the industry — like many other industries — resets post-pandemic. Fewer people switch jobs during economic downturns, and MBA enrollment generally increases. Putting that all together, the competition for those graduating in 2024 and 2025 could be fierce.
MBAs would be well advised to adjust their expectations accordingly. Those right now who are facing several months, if not a year, before they begin their full-time position should take this development as an opportunity, especially those who are being offered funding in lieu of starting their new position. With the economic future so uncertain, it could pay off to diversify your experience.
See more from The Wall Street Journal here.
