Paragon Bermuda which will result in some staff redundancies. Of the 23 Ernst & Young staff affected, some will be redeployed to Paragon.

Jan Spiering, managing partner at Ernst & Young, said: "Regrettably, while some members of our firm will be offered positions with Paragon, economies of scale will mean that there will not be room for everyone. There will be some redundancies but at this early stage we cannot say exactly how many.

"At Ernst & Young we have always considered the strength of our firm to be the quality of our people. At all times we aspire to put our people first and it is with great sadness that we will have to say goodbye to some of our people, all of whom are highly skilled, highly trained technology professionals.

"We have committed significant time and resources to assisting all of our staff in finding new jobs including outplacement counselling, resume preparation and interview and job search services. We will have a dedicated technology recruitment officer handling placement services for all of these individuals.'' The acquisition means Ernst & Young will no longer be in the technology consulting business, but the firm has formed a business alliance with Paragon to facilitate the ongoing provision of technology services to its clients. The firm will also out source its own internal information technology operations to Paragon.

Mr. Spiering said: "The decision to divest our consulting practice to Paragon was driven by the decision to put more focus and investment in our core business areas and the increasing significance of perceived auditor independence driven by the SEC.

"Just like our clients, our business is changing rapidly. We are no longer just an accounting firm. We are a professional services firm offering a range of integrated services to our clients. We must be flexible enough to respond quickly to client needs be it through the introduction of new service lines, creative business solutions or new technologies.

"Out sourcing our IT function gives us that additional flexibility. Being able to draw from Paragon's wider range of technological expertise will enable us to react more quickly to the fast changing pace of technological development.'' Graham Pearson, president and chief executive officer of Paragon, said: "The investment efficiencies and financial and human resources resulting from this acquisition will enable our firm to serve existing and emerging markets more quickly with expanded service lines and enhanced expertise.''