Ernst & Young cuts 400 jobs in shift to e-commerce

Ernst & Young said it has cut about 5 percent of its U.S. consulting business as the company continues to reposition itself to compete in the Internet services industry.

Ernst & Young spokesman Larry Parnell said the company cut 400 of 8,000 jobs.

The layoffs are part of the firm's recent effort to move away from traditional consulting work to business-to-business e-commerce, supply chain and other Net-related consulting projects, he said. Parnell said the layoffs are unrelated to Ernst & Young's possible sale of its U.S.-based consulting unit to Paris-based Cap Gemini. Both firms are still discussing a deal.

Ernst & Young's move comes amid a dramatic shift within the services industry as client demand has moved toward doing business with customers, partners and suppliers online. Parnell said as the firm continues to grow its e-commerce, supply chain management and customer relationship management (CRM) software services business, it will add more employees in those areas.

All of the privately held Big Five--including KPMG, Deloitte & Touche, Andersen and PricewaterhouseCoopers--have been struggling with how to make their established businesses more nimble in a market where start-ups are luring some of their top talent away with stock options.

Yesterday, rival KPMG said it has set up a separate corporate entity for its consulting operations, which is a first step in taking the unit public. The new company, called KPMG Consulting, will be 80.1 percent owned by KPMG and its partners and 19.9 percent by network equipment maker Cisco Systems. Last August, Cisco made a $1 billion investment in KPMG in return for the stake.

In October, PricewaterhouseCoopers cut 1,000 administrative and internal support jobs as part of its plan to shift its focus to e-commerce consulting.