Consultant Capgemini has closed its Irvine office and combined it with an El Segundo site to cut costs.
Paris-based Capgemini shifted some 100 workers from Irvine about a month ago, said Kevin Poole, the consultant’s Western area director.
Capgemini topped last year’s Business Journal list of management consultants here with 106 Orange County workers.
Poole said he’s not worried about impacting clients in the county, which is among the company’s top three regions on the West Coast.
“It’s not that we’re abandoning the Orange County market,” he said. “I would say 95% of our consultants are actually on client sites. There certainly is little need for them to come to a physical office for them to get their work done.”
Poole said he hopes clients are happy to see Capgemini taking steps to save money.
Offices around the country, including Seattle, are being shuttered and folded into other regional offices.
“It makes us leaner and meaner,” Poole said.
El Segundo got the nod over Irvine after a review of workers near the two cities, client locations and real estate costs.
Poole said he “would suspect it’s probably cheaper per square foot” in El Segundo than Irvine.
Campgemini has faced bumpy times in OC. The company ran two Irvine offices at one time. But by the middle of last year it closed an office and laid off about 60% of its workers.
Poole blamed the pullback on a big onetime project that ran its course and had nothing to replace it. He declined to identify the client.
Capgemini specializes in a couple of areas for large businesses. It can help companies with technical or business issues, such as stoking sales or improving human resources or other internal functions.
And it has a unit for smaller businesses called Sugeti that makes up a small part of its sales.
The company also offers outsourcing services from around the world to handle business and technology functions.
But North America has been a laggard for Capgemini, which took a big expansion in the market with the buy of Ernst & Young’s consulting arm back in 2001.
Last year, the company’s North American operation posted a loss of $80 million. The company’s largest region, Europe, had a $151 million profit.
Asia, the smallest of the three regions, contributed about $1 million in profits.
North America has “probably been the main reason” Capgemini has struggled, said Jonathan Crozier, an analyst with WestLB in London.
U.S. rivals are faring better. They include Accenture and BearingPoint, also former units of the large accounting firms.
“There has been significantly more price pressure in the U.S.,” Poole said. “Over the last three years, companies have been looking for the lowest-cost solution.”
Capgemini is restructuring in other ways.
The company recently sold its North American health practice to Accenture for $175 million.
Starting next month, Capgemini plans to realign its business along geographic, rather than industry, breakdowns.
Focusing on industries required a lot of spending on air travel, $7 million alone in the first quarter of this year.
The move and other measures are part of a bid to save $100 million yearly by 2006 and reach profitability in North America.
The office closures are expected to bring a 45% cut in facilities costs. The company also is aiming for a 30% reduction in technology spending.
“They have a lot of offices in the U.S., effectively about twice as much as they needed,” Crozier said.
Capgemini is looking to grow its business in OC, according to Poole. He said he hopes to gain automotive, financial services and medical technology clients.
“What we’ve done is reduce our costs, which makes us more competitive,” Poole said.
