Cap Gemini slashes 2,700 jobs

Cap Gemini Ernst & Young on Tuesday cut both its full-year sales forecast, and its workforce by 2,700. It trimmed its full-year revenue forecast to 9 billion euros (US$7.74 billion), from the 9.6 billion euros (US$8.26 billion) before.

SINGAPORE--Cap Gemini Ernst & Young on Tuesday cut both its full-year sales forecast, and its workforce by 2,700.

The Paris-based management and information-technology consultancy group trimmed its full-year revenue forecast to 9 billion euros (US$7.74 billion), from the 9.6 billion euros (US$8.26 billion) before.

Cap Gemini, which took over Ernst & Young's consultancy businesses in an US$11 billion deal last year, said that it saw a sudden fall in demand from customers in high-technology and telecommunications recently.

"Activity in the group over the last weeks has experienced a marked slowdown, which has been evidenced by a change in behavior of clients and by the phasing, delay or even cancellation of a number of important projects," the Associated Press reported the company as saying.

The company expects full-year sales of US$7.7 billion, instead of US$8.3 billion, with a first-half operating margin of 6 percent on sales of US$3.8 billion. Half of the US$516 million sales drop-off would be from the United States.

Cap Gemini is responding by trimming its workforce by 4.5 percent, or 2,700 jobs. Its global headcount stands at 60,000. The layoffs will be from the US, Britain and the Nordic countries, and its telecom operations.

The company said it would take one-time charge of US$73.2 million in the first half for the restructuring plan. This will be offset in part by an exceptional gain of US$25.8 million. The company will release first-half results on July 30.

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