IBM has dramatically cut the fee spend on its account with Ogilvy PR Worldwide in London, leading to redundancies at the WPP firm's Canary Wharf base.
The global computer firm has used Ogilvy for more than five years in the UK. In the agency's early days it was the only client and until last year was still its biggest spender.
But Ogilvy's role was this week scaled back to involve only the financial management of IBM's 42 agency roster across EMEA. It has been stripped of its role co-ordinating the work of the roster, a task that will now be performed in-house from Paris by IBM's EMEA media relations director Ian Colley.
More responsibility will also be taken by country PR heads and retained agencies in each market. IBM uses Brodeur Worldwide, BSMG Worldwide and Text 100 for various parts of its UK PR.
The cut in IBM's Ogilvy fee - from over pounds 500,000 in 1998 to just over pounds 100,000 this year - has led to staff cuts. Redundancies include account handlers Claude Cameron and Kate Martens, both of whom left two weeks ago following what practice head and board director Simon Quarendon described to staff as a 'significant drop in income'.
The departures follow those of directors Julian Goldsmith, Tim Kitchin and Tom Delaney, and the folding of the financial and professional services division into the wider corporate practice after just eight months as a standalone unit.
Commenting on these departures - together with six other staff leaving toward the end of 2000 - Ogilvy MD Donna Zurcher was stoical: 'We grew 53 per cent last year and over 100 per cent the year before. From 25 staff two years ago to nearly 100 now is huge.
'With that sort of growth the firm's culture changes. Some people who liked working for a small agency do not like working for a large corporation and have, therefore, left,' she insisted.