Cap Gemini To Cut 5,500 Jobs

The job reductions, designed to streamline Cap Gemini's administrative operations, come on top of 5,400 job cuts last year. The company currently employs 55,000 people worldwide.

The technology sector investment boom of the late 1990s has largely vanished, and Cap Gemini's clients are focusing on making those investments profitable, the company said.

Cap Gemini also announced a new management structure to improve profitability and sales in its three main businesses--consulting, information technology and outsourcing.

"This is a transformation plan designed to meet the new fundamentals of the market," said spokesman Philippe Guichardaz. "We're trying to adapt the business model to the conditions of the market."

Guichardaz said that 2,500 of the job cuts are to take place immediately in the telecom and financial service sectors. Another 3,000 jobs, largely in back-office positions, are to be eliminated by January. About half of those employees, however, are to be offered positions elsewhere within the Paris-based company, he said.

Cap Gemini will take a charge of $138 million (140 million euros) related to the 2,500 job cuts, which are expected to save the company about $227 million (230 million euros) per year.

Guichardaz said Cap Gemini hasn't determined the cost of the larger restructuring.

The company also said it expects operating profit margins for the first half of 2002 to fall sharply from the 3.9 percent in the second half of 2001 due to a slump in demand for its technology and consulting services, as well as price pressure.

The company is to release provisional results for the first half of 2002 on July 25.

In trading in Paris, shares of Cap Gemini closed up 0.21 percent to $42.36 (42.84 euros).

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