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Heidrick to cut 12% of workforce

January 16 2009

Heidrick & Struggles International Inc. (NASD: HSII) said it will cut its global workforce by 12% and restructure its business to rely more heavily on leadership advisory services. The cuts will include workers at all levels and will number about 200 people, said Julie Creed, VP of investor relations.

The Chicago-based executive search firm said it will take a $20 million charge in the first quarter for the restructuring with savings from the move estimated at $31 million over 12 months. The company also said it will shutter some of its 21 U.S. offices.

Heidrick said it plans for leadership advisory services to account for 40% or more of company revenue within the next five years. Such services accounted for about 4% of revenue in 2008 and include such things as succession planning, talent retention management, development, assessment and executive on-boarding. The company also said it aims to have technology-related search services account for 10% of revenue in the next five years.

In addition, the company also said it's willing to look at a significant "transformational" acquistions should the opportunity arise.

"The global economic downturn is only one driving force behind these major changes we plan to aggressively implement," said CEO L. Kevin Kelly. "The executive search business has rigidly adhered to a half-century old business model, but our clients have let us know they want more than just search. In addition, we are seeing new technologies that could lead to disintermediation and erode the value of once-proprietary information."

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