Martin Armstrong, founder and one of four partners, said: "In a marketplace with less work, we found that they had nothing to do. In these times we just cannot afford to train and grow people from a reduced business base."
The search firm has 29 remaining members of staff in London.
The researchers who have been made redundant were less than two years out of university when Armstrong International hired them.
Armstrong International was one of the first financial services search firms to close down its office in New York earlier this year, moving quickly to cut costs when the downturn in the markets became apparent.
Unlike many headhunters, Martin Armstrong is known within the search industry for his refusal to "talk up" the market.
Although he continues to see work for headhunters at the most senior levels in financial services, he recently told Financial News: "Our revenues from investment banking are down 50% this year owing to less work, and next year we expect them to be down even further. Headhunters need diversification to survive."
Of the departures in London, Armstrong said: "We took a long time deciding to hire these people, they are very good and we deeply regret letting them go."
The firm is known to favour growing consultants within the organisation, and has been a training ground for some prominent headhunters.
Both Elizabeth Hammond, now co-head of global financial services search at Heidrick & Struggles, and Sonamara Jeffreys in its London financial services practice, went through the ranks at Armstrong International.
The firm has long-standing relationships with some leading financial services firms, including Goldman Sachs.