The firm’s annual results to March 31 2010 show staff numbers across the group fell 3,537 to 19,688 worldwide.
The vast majority of workers were let go at O’Rourke’s Middle East arm where turnover dropped dramatically from £903m to £423m.
The Middle East arm reports alongside the European and South Asia divisions.
The workforce at the combined unit fell by 3,989 as extra workers were taken on at the Australasia division.
The drop in staff numbers saw annual wages costs slashed by £48.7m while redundancy costs were only £16.7m.
Confusion surrounded the total number of redundancies because of the way O’Rourke reported its staff levels the previous year.
Employee numbers as of March 2009 were reported as 35,753 which would have meant 17,500 staff were let go during the year.
But the 2009 figure included workers employed by joint ventures including the ALDAR operation in Abu Dhabi which has been wound down.
Chairman Ray O’Rourke was still bullish about future prospects despite the downturn and vowed not to get caught-up in low bidding wars to win work.
He said: “We will stay committed to our policy of absolute refusal to follow the market down by chasing unprofitable work”
The drop in staff levels helped an improvement in profit margins to 10.1% as pre-tax profits remained steady at £110m.
O’Rourke said: “As a direct employer, the year proved our most challenging ever, with a significant number of people leaving the group as we took decisive action to align business costs with current and anticipated workload.
“The majority of this decline was directly attributable to the removal of workload associated with the ALDAR joint venture in Abu Dhabi, and the steep decline in the Dubai market, where many projects were operationally paused.
“Similarly, in our UK businesses, we right-sized operations in response to the slowdown in the construction sector.”
O’Rourke believes workloads will improve later next year and the firm has implemented a growth strategy to 2020.
He said: “As current market conditions show limited signs of easing in the short term, the Group’s commitment to safety, proven strategy, integrated capabilities, attractive opportunities, rigorous and disciplined capital management and motivated employees mean we are quietly optimistic in our abilities to do what it takes to create value for all our stakeholders over the long term.”