The restructuring also includes the closure of the Toronto and Munich operations and staff reductions in most of its other offices around the world.
For Hong Kong, the move comes as a surprise, especially as it had a blue chip client base that included Citibank, General Electric, IBM, and more recently HSBC. Modem Media Hong Kong creative director, Glenn Bartlett said: "We were breakeven to slightly profitable ... but I suppose we weren't growing as quickly as initially planned."
He added that about one per cent of the total marketing communications budget was currently being spent online, which didn't make Hong Kong a viable market in the short term.
But Bartlett - who has been with Modem Media for almost six years, starting in Toronto, with stints in Asia including Japan and Hong Kong - said that the agency couldn't go into offline media, which is the route other interactive companies have taken in order to survive.
"We are a digital pureplay and that's how we are listed on Nasdaq. So if we moved offline we would rapidly become a traditional advertising agency and, therefore, no longer a tech stock, he said.
Bartlett said he will officially leave Modem Media by next month after finishing a number of assignments for clients. He added that he would remain in Hong Kong to look for other opportunities.
