KPMG Consulting lays off 5% of workforce

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 Netherlands-based tax and audit firm KPMG International, said the layoffs, mostly in the financial services division, will affect 5% of its 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, KPMG Consulting 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 $743 million to $753 million, compared with 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 quarter of this year.

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.

"Last year, I would have said the [job cuts] were made because they were slimming down in preparation for an [initial public offering]," Randall said. "But now, post-IPO, it's because e-business spending and IT technical services spending have gone south. And KPMG is no more immune than any other firm."

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