Cap Gemini Ernst & Young LLP has said that it will cut 2,700 jobs across its global operations due to an economic downturn and overlap issues arising from the merger between Cap Gemini and Ernst & Young's consultancy practice. Worldwide employment at Cap Gemini totals approximately 60,000.

Jobs will be cut in the United States, the United Kingdom, and Scandinavia, and across the firm's telecoms operations. In addition to the job cuts, another 700 employees are to be transferred as company divisions are overhauled.

The firm will absorb a $73 million restructuring charge to implement a cost-cutting plan that includes the staffing layoffs. It is expected that the restructuring will produce an increase in the operating profit margin for the second half of 2001. Shares in the consulting firm, which are listed on the Paris stock exchange, fell 21 percent with announcement of the cutbacks and an accompanying revised projection for a downturn in revenue.

Cap Gemini was formed in February, 2000 from the acquisition of Cap Gemini SA by Ernst & Young's consulting business.

The downturn in the technology and telecoms sector has resulted in delayed and cancelled orders for hardware and software sales and consulting services, particularly in the United States.