Sorrell says job cuts planned in 'mature markets'

Speaking at the Morgan Stanley annual technology, media and telecoms conference in Barcelona, Sorrell said WPP would invest in emerging countries such as India, China or Brazil next year, in which WPP is strong and that promise growth, while cutting elsewhere.

Sorrell said: "We will have to invest in those markets and take out head count in more mature markets. The key thing for us is to balance revenue and cost growth in terms of headcount."

News that WPP plans to reduce its head count in mature markets, which include the US and UK, follows reports last month that it had placed a freeze on all hirings until further notice.

In an e-mail to senior staff, WPP said that the freeze applied to all staff regardless of salary or role and includes replacement hires and open positions.

Sorrel told the conference that he expected 2009 to be difficult, but that conditions in October had not materially worsened. WPP told staff recently that "preliminary results for September show another month in which even our recently prepared forecasts for revenues have not been achieved".

However, despite the tough conditions expected in 2009, Sorrell said he would be surprised if advertising budgets shrank. Although he offered no forecast for the fourth quarter of 2008, he added that he found some of the comments by analysts "excessively pessimistic".

He said he was feeling more optimistic about 2010 due in part to the scale of the financial bailout packages lined up by governments. He said financial markets will start recovering toward mid-year [2009], and 2010 will see a recovery of sorts.

"Whether it is the lame duck administration or the incoming administration, there is clearly going to be a further massive fiscal stimulus package for the US economy and there are at least another 20 countries involved in some form of restructuring or guaranteed measures on liquidity," he said.

Sorrell is this week contending with the possible collapse of parts of the US automotive industry as Washington considers a bailout for GM.

Although Ford does not appear to be threatened, it is a major client of WPP and the car industry makes up 10% of WPP's business. Alongside Ford, Volkswagen is also a client.

WPP owns advertising agencies including JWT, Ogilvy & Mather, Young & Rubicam and Grey.