Big Consulting Firms Pull Out of Russia

Marion Steward

Three consulting giants joined the corporate retreat from Russia, adding to the pressure on other professional-services firms to follow suit. The moves came after a backlash against the firms’ earlier compromise positions.

Accenture PLC said it was discontinuing its entire 2,300-people strong business in Russia. Rival consulting firms McKinsey & Co. and Boston Consulting Group each said they are suspending operations in Russia.

The moves mark an escalation from the action some of the firms had already committed to. McKinsey earlier this week said it would no longer work with any government entity in Russia, but declined to say if that ban applied to state-owned corporate clients.

The firm says it won’t take on any new clients and will “immediately cease existing work with state-owned entities” in Russia. McKinsey will suspend all its services in the country, once the rest of its existing work there is done, the firm said Thursday. McKinsey has more than 400 consultants in its Moscow office, according to its website.

Boston Consulting Group also said it won’t take on any new work in Russia. “While honoring our contractual obligations, we have already started to wind down work where possible,” the firm said Thursday in a memo to employees.

The firms’ earlier said only that they would stop doing business with the Russian government. That drew fierce criticism on social media from some current employees, as well as scores of alumni.

Igor Smelyansky, chief executive of the Ukrainian national postal operator, is a former Boston Consulting Group employee according to his LinkedIn profile. In a posting on that site earlier this week, he criticized the consulting firm’s initial failure to cut ties with state-owned companies.

“My day is filled with death from the bombs, funded by BCG clients such as [oil firm] Rosneft and [nuclear company] Rosatom,” Mr. Smelyansky wrote on LinkedIn.

Oleksandr Kravchenko, managing partner for Ukraine at consulting firm McKinsey & Co., earlier this week wrote a LinkedIn post attacking Russia’s “criminal actions” and calling on all companies to stop doing business with any organization even part-owned by the state.

It is highly unusual for internal unhappiness with consulting firms’ leadership to surface publicly in the way the debates over Russia have this week, according to alumni.

“This has never happened before. You can’t go expressing dissent in a consulting company, even as a partner, in the way in which it’s been done this week,” said Michael Hobbs, a London-based entrepreneur and former managing director at Accenture.

The Big Four accounting firms appear to be moving more cautiously than the consulting firms. While condemning Russia’s invasion of Ukraine, none of the Big Four has yet committed to severing ties with Russia. Deloitte this week became the first of the firms to state publicly it was considering a pullout.

“Deloitte is currently reviewing our business and presence in Russia,” the firm said. “We are mindful of our professional obligations and the changing circumstances as we undertake this review.”

The Big Four face a complicated, potentially litigious, process if they decide to exit Russia, according to people close to the firm. The Russian members of the accounting firms’ global networks are separate legal entities.

https://www.wsj.com/livecoverage/russia-ukraine-latest-news-2022-03-04/card/big-consulting-firms-pull-out-of-russia-UGnj9ebn0TFu3RtwYcCF

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