Omnicom Eyes $1Bn Labour Savings by 2028, Announces Further Workforce Reductions

In an effort to save $1 billion annually in labour costs by 2028, Omnicom is gearing up for additional layoffs. The decision is in line with a larger cost-synergy aim of $1.5 billion per year, which was set after acquiring Interpublic Group (IPG). Total yearly savings for the US advertising group increased from $750 million, which was initially stated when the IPG merger was announced in late 2024, to $1.5 billion. The workforce-related actions will account for the majority, amounting to $1 billion, as detailed in its fourth-quarter results.

A three-year timeframe will be used to implement the savings. In 2026, Omnicom anticipates delivering $645 million in savings from labour-related initiatives. Therefore, it will reach $1 billion by 2028 and $920 million in 2027. Cuts, according to executives, will involve layoffs and the offshore or near-shoring of jobs to countries with lower labour costs. Plus, some of the company's back-office tasks will be outsourced.

Omnicom Revamping Business Operations

In addition to the 4,000 layoffs announced in December, just after the IPG deal closed, the statement indicates additional restructuring. John Wren, CEO, has stated his goal of achieving $900 million in total savings by the end of 2026. He expects to produce the full $1.5 billion run rate within 30 months, by mid-2028. As the business merges two holding companies into one, CFO Phil Angelastro informed investors that "duplicative corporate network and operational functions" had already been eliminated. He made the comment, "You couldn't keep two of everything", in reference to duplicative or executive positions.

In addition to reorganising its operations into nine core practice areas under the banner of "Connected Capabilities", Omnicom is reshaping its agency portfolio by integrating and rationalising brands including DDB, FCB, and MullenLowe. A more streamlined resourcing model and the elimination of unnecessary personnel are part of the updates. A further $240 million will be saved by the group through the consolidation of real estate, and $260 million will be saved through the optimisation of information technology, procurement, and operations.

Offshore centres in India, Colombia, and Costa Rica are part of the company's operations and will likely become more important in supporting back-office tasks. According to Angelastro, AI is not the main factor in hiring decisions, but the organisation is looking into automation possibilities to make things more efficient. Investors were pleased with the outcome. Shares of Omnicom increased by over 15% to close at $80 on the announcement of the larger savings target and the unveiling of a $5 billion share buyback programme. While praising the repurchase and increased synergy objective, analysts at Bank of America expressed concern over the lack of organic growth guidance for 2026.

Why Omnicom is on Cost-Cutting Drive?

As part of its strategy to merge IPG and reposition itself in a market experiencing pricing pressure, technological change, and growing competition, Omnicom has broadened its cost-cutting plan. The goal is to build a leaner, more centralised business. Executives are anticipated to provide greater insight on operational alignment and growth targets during an investor day scheduled for 12 March, where the group will describe its longer-term integration strategy.

Earlier this year, Omnicom predicted that, due in part to the sale of non-core assets, the combined headcount of the two companies will drop to about 105,000 by the end of 2024, from 128,000. Some analysts have predicted that additional cuts may occur in 2026 and 2027, although the business has called these predictions premature.