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Cap Gemini Ernst & Young, which is Europe's biggest computer services company, said on Thursday that it plans to reduce its workforce by up to 5,500 as it sees no sign of a rebound in the technology sector in the near future.
"We can no longer wait for a hypothetical recovery at some point in the future," said the company's Chief Executive Officer, Paul Hermelin, in a conference call. "We must adapt ourselves to the market as it is."
Cap Gemini said that the IT consulting and services sectors were experiencing strong price pressure, particularly in IT services, as businesses looked to make their IT investments profitable. As a result, it will now aim its sales activities in its main markets: consulting, IT and outsourcing.
Cap Gemini Ernst & Young employs around 130 people in Ireland and a spokesperson for the company told ElectricNews.Net that job losses were not anticipated here.
The Paris-based company said that it planned to immediately cut 2,500 jobs at its telecoms and financial services division at a cost of EUR140 million. It also said that it would cut up to 3,000 non client-facing positions and would try to move most of these people into sales or delivery jobs.
In its most recent results released in April, Cap Gemini recorded first quarter consolidated revenues of EUR1.87 billion, which were down 15 percent from Q1 2001. The company said on Thursday that sales in the second quarter would be close to the revenues it reported in the first quarter.
The company also announced a managerial shake-up as part of its "transformation" programme. Along with a new chief operating officer and deputy chief executive, it was announced that Paul Spence will now head up the United Kingdom & Ireland operation.
Meanwhile, the French telecoms equipment maker Alcatel said on Wednesday that it will reduce its workforce by 10,000 on the back of a warning that it will post a full-year loss.
Alcatel had previously forecasted an operating profit for 2002, but it was forced to revise this guidance due to weak orders in April and May. Alcatel also said it did not anticipate a swift turnaround in the IT market and it dropped an earlier prediction that sales would rebound in the second quarter.
It is not expected that the current wave of cuts will impact Alcatel's employees in Ireland, but the company has already gone through a major restructuring of its Irish operations in 2002. It announced earlier this year that it would close both its Cork software development operation in Bandon and its Clare logistics centre in Shannon, with the loss of around 90 jobs.
The Shannon centre has already closed and the software development facility is in the process of shutting down. Alcatel will employ around 85 people in Ireland by year-end at a telecoms networks services centre in Bandon and a sales and marketing office in Dublin.
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