KPMG Consulting Inc. yesterday said it's laying off between 450 and 550 workers in the U.S. and Canada because of weakened demand for IT services.
The McLean, Va.-based consulting company, which is no longer affiliated with tax and audit firm KPMG LLC, said the layoffs, mostly in the financial services division, will affect 5 percent of the company's 10,200 worldwide workforce.
"This is due to the softening in demand [we saw] in the latter part of the March quarter. And we're being aggressive in response to that," said Elizabeth Brooks, a company spokeswoman.
A year ago, the firm laid off close to 350 employees, also because of a drop in demand for IT consulting services.
The company said it will release earnings for its third quarter, which ended March 31, after the market closes on May 1. At that time, KPMG Consulting expects to report continued growth, with revenue in the range of US$743 million to $753 million. That compares to revenue of $632 million and $703 million reported in the March and December quarters last year, respectively. The $15 million to $20 million charge associated with the workforce reduction will be recorded in the June 2001 quarter.
Joshua Randall, an analyst at Kennedy Information Research Group in Fitzwilliam, N.H., said KPMG Consulting is no different from other firms suffering from the downturn in the economy and the weakened demand for IT consulting services.
"Last year, I would have said the [job cuts] were made because they were slimming down in preparation for an IPO," Randall said. "But now, post-IPO, it's because e-business spending and IT technical services spending have gone south. And KPMG [Consulting] is no more immune than any other firm."