Budget Ax Keeps Falling

CTP searches for savings and a silver lining.

More layoffs are in the works at financially troubled Cambridge Technology Partners (CTP), as the integrator cuts costs and looks to develop new practice areas in supply chain and vertical markets, all in an effort to climb out of the red.

Struggling with depressed stock values, employee turnover and mounting losses, CTP and MarchFirst both have targeted the West Coast regions for the latest round of layoffs. These recent layoffs are a direct response to offset revenue slowdowns. In addition, both companies say they are taking steps to stem losses and seek new revenue streams by developing new practices.

In its latest round of troubles, CTP expects to cut 7 percent of its staff, or about 280 positions, in response to weak business demand and lower-than-expected Q4 earnings. Company president and CEO Jack Messman says most of the next round of job cuts will be localized to its California region.

The company expects to report an operating loss of $19 to $21 million, on a pretax basis, as a result of lower-than-expected revenue. After-tax figures were not available.

The new cutbacks represent the second time since last fall that CTP cut staff. For its Q3 financial results, the company took a one-time restructuring charge to eliminate 400 positions and reduce office space at its headquarters and North American field locations. For these latest cuts, CTP expects to take up to a $5 million charge.

Meanwhile, a hobbled MarchFirst is continuing its job cuts. Sources say the latest layoffs are localized and mainly on the West Coast. Company executives would not say where the latest cuts are located but did say that the cuts are a continuation of a broad layoff plan announced Nov. 13. The company will cut 1,000 positions, or 10 percent of its 10,000 employee base, in an effort to save $100 million annually.

Back at CTP, the road to profitability has been a long one, but Messman expects CTP to go back into the black early this year. To achieve that, CTP will focus on e-commerce, supply chain, mobile commerce and eCRM solutions in four verticals: financial services, communications, manufacturing, and energy and deregulated utilities.

CTP is banking on its traditional integration skills as one of the linchpins of its strategy. "The traditional value chain needs to be integrated out to e-business, and e-business needs to be integrated back to the traditional value chain," Messman says.

The integrator has started hiring specialists in the four verticals, and more will be recruited.

CTP also is working to develop three new practices or strategic offerings. For instance, its European wireless practice will be migrated to the United States. Moreover, efforts are under way in the ASP space. CTP , which has invested in ASPs, is studying the possibility of launching an ASP practice, and possibly even performing ASP services.

Still, CTP cant afford any missteps. The company says it is climbing out of the hole and must carefully choose its practice areas.