Big consultancies move to cut ties with Russia after backlash

The Big Three strategy firms and Big Four accounting and consulting firms have announced they are suspending operations in Russia.

McKinsey and BCG initially said they would cease advising the Russian government but stopped short of axing their lucrative engagements with state-owned and partially state-owned entities in the country. 

That half-measure, which McKinsey’s CEO Bob Sternfels publicized in a LinkedIn post last Sunday, drew criticism from McKinsey staff and alumni. Alumni commenters labeled the announcement as “cowardice” and a “weak PR move.”

In a rare example of a McKinsey leader diverging from the official company line, Ukraine managing partner Oleksandr Kravchenko urged all companies to cut ties with any business in which the Russian government owns a stake.McKinsey and BCG course-corrected on Thursday. McKinsey said it would cease work for state-owned entities and would suspend all client work in Russia once its active projects ended, though it did not give a timeline. McKinsey has operated in Russia for nearly three decades and advises 21 of the country’s 30 largest companies. The New York-headquartered firm has more than 700 employees in Russia.

BCG said it would suspend its work with clients and offer its more than 400 employees in Russia a chance to relocate to other countries or work on internal projects for non-Russian clients.

The moves followed Grant Thornton's Tuesday announcement that it was cutting ties with its 500-person Russian member firm and Accenture’s decision on Wednesday to close its 2,300-person business in Russia.

The above actions put pressure on other consulting firms to move quickly to exit their work in Russia.

Bain & Company, the remaining Big Three strategy firm, said on Wednesday it was “re-evaluating its work in Russia,” according to a social media post from CEO Manny Maceda. The company on Saturday said it would no longer work with state-owned or private businesses in Russia (having previously ceased Russian government advisory contracts in 2020) and that it had placed a moratorium on new work in the country. 

The Big Four accounting and consulting firms' pullback came slightly later, possibly because exiting Russia means potential legal and contractual issues with the independent member country firms that make up their global alliances - as opposed to the simpler single-firm structure of global management consultancies. 

Nonetheless, PwC and KPMG on Sunday said they were cutting ties with their Russian member firms and EY and Deloitte said the same today. 

The pullback of professional services firms from Russia is part of a larger corporate exodus precipitated by Russia’s illegal invasion of Ukraine and the resultant global censure and tidal wave of sanctions. BP said it is exiting its stake in Rosneft, while Shell said it has ended its partnership with Gazprom. Ford, GM, and Volkswagen said they are suspending their operations in Russia, while Apple, Nike, and Canada Goose have paused product sales in the country.