Internet consultancy to cut 545 jobs

Technology consultancy Sapient will cut 545 jobs, or 22% of its workforce, in an effort to cut costs.

Technology consultancy Sapient will cut 545 jobs, or 22% of its workforce, in an effort to cut costs.

The cuts will include 415 consulting professionals and 130 administrative employees, the company announced in a statement.

Most of the cuts are in North America although the company's UK office will suffer a few redundancies, said a company spokeswoman. The company said it was consolidating office space in the cities where it has operations, but that all those offices would remain open.

Sapient said it would take a restructuring charge of $50-55m (£38m) in the first quarter of 2002. The job cuts and other cost-cutting measures are expected to save the company approximately $60m (£42.3m) per quarter over the next six months.

Sapient, like other Internet consulting firms, is suffering from a downtown in the global economy. Last year, Sapient cut more than 1,100 jobs, closed its 70-person office in Australia and consolidated office space in other countries.

However the company also announced the expansion of its operations in India, sending 60 consultants to its New Delhi office and increasing its hiring and recruiting efforts in that country.

In addition to its problems from a weakened economy, Sapient is also suffering from a lack of profitability from its India operations, said George Price, an analyst at Price Legg Mason Wood Walker.

While the cost of labour was cheaper in India, customers were also charged less for services than in other countries, Price said. As a result, revenue was lower and probably insufficient to offset the operation's set-up costs, he said.

Price said the outlook for Sapient is uncertain. The good news, he said, is that the company expects to have $200m (£141m) in cash at the end of the first quarter.

Sandra Notardonato, an analyst at Adams, Harkness & Hill, said the cost reductions in were expected.

Sapient also announced that Edward Goldfinger had stepped down as its chief financial officer. Goldfinger has taken on the chief financial officer's role at Empirix, a company that provides products for testing and monitoring performance and reliability of Web and voice applications.

Susan D Johnson, currently senior vice president of Sapient, will take over as acting chief financial officer while the company searches for a replacement.

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