Computer consultant cuts 5,500 jobs

Cap has failed to defy an economic downturn

Europe's largest computer consultancy, Cap Gemini Ernst & Young, has announced plans to cut 5,500 jobs in addition to the 5,400 jobs the group cut last year.

The cut-backs were blamed on a desperate need to cut costs following a sharp fall in demand for the group's services.

About 2,500 of Cap Gemini Ernst & Young's telecoms and financial services workers will lose their jobs immediately, the company said.

In addition, 3,000 "non client-facing" positions will go, the company said.

Fighting back

The cuts come as part of the French IT consultants' efforts to boost profit margins from 7.4% to 8.5% and to improve its market performance.

Also part of the efforts will be a radical restructuring and simplification of Cap Gemini Ernst & Young's organisation.

The changes would aim to improve its sales performance in its three main markets, consulting, IT and outsourcing.

Weak investment in computer systems and reduced spending on computer consultancy services by companies across the world have been damaging to Cap Gemini Ernst & Young's bottom line.

Consequently, the group's share price has fallen 50% this year to its lowest level for five years.

Trading below 43 euros (£28, $42.31), the stock is a shadow of its former self. In March 2000, it stood at 340 euros.