IT services firm Cap Gemini Ernst & Young is to cut 2700 jobs globally after suffering unusually high cancellations of orders. The jobs will go mainly in the US, UK and Nordic territories.
Cap Gemini blamed delayed or cancelled orders in the financial services industry in the US and Benelux, among US and Nordic tech firms and in US manufacturing. Revenues for 2001 are now estimated at £5.5bn, a growth rate of 5.9 per cent, rather than the £5.86bn originally estimated.
The firm said earlier this month that only 250 of its 9000 UK staff would go, but the situation has since worsened.
A company statement issued today [Tuesday] said: "Activity in the group over the last weeks has experienced a marked slowdown which has been evidenced by a change in the behaviour of its clients and by the phasing, delay or even cancellation of a number of important projects."
Cap Gemini said that after its expense-cutting measures, which will cost £51.9m, it would make an eight to nine per cent operating profit in the second half of the year, providing the market doesn't get any worse.
The firm said that the £51.9m charge will be partially offset by the sale of its business processing outsourcing (BPO) division to rival Vertex.
Analysts said the news was not a good sign for a company that has lost standing in the UK market during the last two years.
Anthony Miller, a senior analyst at Ovum Holway, told vnunet.com: "It's all gone horribly pear-shaped at CGEY. We've predicted growth of 10 per cent for the market, so they're under performing.
"[Cap Gemini] will have been hit by the drop off in ad hoc project work in areas of Europe and the US. In some countries they act almost as an IT staff agency and they may be still be suffering from the takeover of Ernst & Young.
"They've lost standing in the UK over the last two years and they've obviously got a lot of thinking to do on how to regroup over the next couple of years.
"That's not going to be easy in the tough market we're expecting. It must have been a hard decision for them to sell off their BPO unit to Vertex, as it is a solid area."
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