February 23, 2000 9:40 AM PST

KPMG cuts 350 jobs at consulting unit

Big Five consulting firm KPMG said it laid off 350 U.S. consultants in an effort to meet growing client demand for e-commerce consulting projects.

"We took this action as a strategic realignment," said Elizabeth Brooks, a spokeswoman for the firm. "We're seeing tremendous growth in client demand for (e-commerce) services and we're making every effort to meet that demand. We're really having to target our personnel against those marketplace needs."

KPMG, which has an employee base of 10,000 consultants in the United States, said the layoffs were effective as of last week.

The move comes amid an overall shift in the services industry as client demand has moved toward doing business online and competition escalates against newer, more nimble Internet consulting firms, such as Viant, Scient, iXL, Zefer and others. KPMG competitors Ernst & Young and PricewaterhouseCoopers have both announced recent layoffs of their consulting staff in order to reposition themselves as viable Internet services players.

Earlier this month, Ernst & Young cut about 5 percent of its U.S. consulting workforce as 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.

Last October, PricewaterhouseCoopers cut 1,000 administrative and internal support jobs in an effort to shift its focus to e-commerce consulting. An e-commerce consulting engagement can entail providing companies with anything from Web development and strategy to digital branding and design.

KPMG's Brooks said the firm doesn't anticipate any future layoffs. "This action was for very specific and targeted strategic reasons and not a mass action," said Brooks.

Brooks added that while the firm isn't quite meeting its target revenues growth rate for the fiscal year 2000, KPMG revenues are currently growing at more than 20 percent.

"We're not where we want to be as planned, but we're also only halfway through the year," said Brooks.

KPMG, which has been aiming to take its consulting arm public, incorporated the unit earlier this month, the first step toward a public offering. The firm recently teamed with Microsoft to provide consulting services based on the Windows 2000 operating system targeted at dot-com start-ups.

 

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