California-based IT services firm Computer Sciences Corporation (CSC) says it will cut 5000 jobs over the next two years, mainly from its operations in Europe. The news comes as the vendor confirms it is exploring a potential sale of the company.
CSC says it has hired Goldman Sachs as financial adviser in response to recent expressions of interest in the company. But the vendor did not identify any potential buyers.
In a statement the vendor says it will implement restructuring measures that will see 4300 jobs cut during fiscal 2007, which began 1 April. Another 700 will go in fiscal 2008. The majority of the cuts will occur in the vendor's Europe operations.
The restructuring programme is expected to result in pretax savings of $150m in fiscal 2007 and $300m in fiscal 2008.
Van Honeycutt, CSC chairman and CEO, says: "For some time it has been apparent to us, and to other companies in our industry, that there is excess capacity in certain geographies, particularly Europe. After lengthy consideration, we have decided that this is an appropriate time to deal with the issue through a restructuring. This action is designed to enhance shareholder value regardless of any strategic alternatives we may explore."
A good portion of the layoffs will be in consulting and systems integration. Analysts at Gartner believes CSC may include other support positions in the layoffs, which they say could affect delivery of services and account management.
"Clients should re-evaluate their contracts and determine how layoffs and a sale to another provider might affect them," says the analyst group in a note.