McKinsey & Company, one of the world’s leading management consulting firms, is undergoing a profound transformation driven by artificial intelligence, according to Bob Sternfels, its global managing partner. Speaking at the Consumer Electronics Show in Las Vegas during a live taping of the “All-In” podcast, Sternfels revealed that AI is reshaping the firm’s workforce in a way that allows for both job creation and reduction without sacrificing overall growth. He described this shift as the “25 squared” approach: McKinsey is expanding its client-facing roles—such as consultants working directly with clients—by 25%, while simultaneously reducing non-client-facing positions, which include back-office and support functions, by approximately 25%. Despite the headcount reduction, output from these non-client-facing areas has increased by 10%, demonstrating a significant leap in productivity. Sternfels attributed this efficiency to AI, which has already saved the firm 1.5 million hours in research and data synthesis work in the past year. As a result, human employees are no longer handling routine, junior-level tasks but are instead “moving up the stack” to focus on higher-level strategic analysis, complex problem-solving, and client relationship management. A key enabler of this shift is the integration of AI agents—customized digital workers that operate autonomously. As of last week, McKinsey employed 40,000 humans and 25,000 personalized AI agents. Sternfels expects the number of AI agents to equal that of human employees by year-end, signaling a new era of hybrid workforce dynamics. The firm’s evolving model challenges the long-held assumption that growth requires proportional increases in headcount. Instead, McKinsey is proving that productivity gains from AI can fuel expansion in core business areas even while downsizing support functions. This transformation reflects a broader trend across large, established enterprises, where AI is forcing a fundamental rethinking of organizational structure and operational speed. Sternfels emphasized that today’s CEOs are less focused on traditional strategy and more on organizational agility: “You have a choice—transform or die.” He noted that companies are now moving at “literally warp speed,” driven by the imperative to adapt or risk obsolescence. For young professionals entering the workforce, Sternfels advised cultivating uniquely human skills—such as judgment, empathy, creativity, and ethical reasoning—that AI cannot replicate. He also highlighted McKinsey’s shift toward outcome-based pricing models, where compensation is tied to measurable client results, further aligning incentives with AI-driven efficiency. Industry observers view McKinsey’s pivot as a bellwether for the future of professional services. The firm’s aggressive AI adoption underscores how AI is not just automating tasks but redefining roles, workflows, and value creation. As AI agents become integral team members, the consulting industry—and indeed many knowledge-intensive sectors—must evolve from human-centric models to hybrid human-AI ecosystems. McKinsey’s journey illustrates that transformation is no longer optional; it’s the core of survival and growth in the AI era.