MCN Direct Newswire

Vol. 2 No. 45, 1 December 2003

This issue is sponsored by:

Cedar Software and Onyx Software

This issue news

1. BBC puts $3.4bn contract up for grabs
2. BearingPoint builds UK business
3. LogicaCMG reorganises Hertfordshire
4. Accenture forecasts 2004 growth
5. Capita predicts rise in HR outsourcing
6. Further information - feedback/forward to a colleague/unsubscribe

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1. BBC PUTS $3.4BN CONTRACT UP FOR GRABS

The BBC is planning to sell its IT services subsidiary BBC Technology, offering the buyer a potential $3.4 billion, 10-year outsourcing contract in return.

The decision follows a BBC review that identified potential savings of $34-52 million a year if the corporation outsourced its technology requirements. The review concluded that the BBC should conduct a European Union procurement process in which the winner would buy BBC Technology and take on the company's 1,400 staff.

The procurement process is due to be completed by next autumn and includes existing technology contracts both within the BBC and with external BBC Technology clients, as well as $86 million worth of assets. The BBC expects to raise $172-258 million from the sale and would then spend approximately $344 million a year on an outsourcing contract beginning before the end of 2004.

Potential bidders include all the likely suspects - IBM Global Services, Accenture, EDS, CSC, BT and the rest. But as well as taking on assets and products beyond the outsourcing contract, the supplier will also have to contend with union opposition that fears job cuts and condemns the sale as "creeping privatisation" at the BBC.

The corporation said BBC Technology generated a turnover of $378 million and delivered $33 million in profits and price reductions back to the BBC last year, but noted that if the division were to be competitive, further rationalisation would be needed, resulting in substantial job losses.

BBC director general Greg Dyke said: "By taking our technical support contract to the market and selling BBC Technology we can achieve significant savings over a sustained period of time. We would also expect to receive a significant sum of cash for the business."

2. BEARINGPOINT BUILDS UK BUSINESS

BearingPoint has expanded its UK financial services team with the appointment of five new managers as it commits to developing a full presence across the UK market.

From a standing start in October 2002 and a formal launch in March 2003, BearingPoint's UK operation has been rebuilt, following the sale of KPMG Consulting's UK arm to Atos Origin. BearingPoint now has around 200 consultants in the UK and 3,000 staff across Europe after buying various European KPMG Consulting and former Andersen business consulting operations.

The five new financial services hires in the UK are: Chris Tattersall, formerly global leader of the corporate banking community at Capco; Rob Cairns, formerly technology manager for capital markets at Deloitte Consulting; Paul Turrell, formerly director of shared services and outsourcing at KPMG LLP's consulting arm; John Smith, formerly a client lead director for financial services at KPMG LLP; and Ian Holden, formerly a senior manager at Deloitte Consulting with responsibility for the delivery of Basel II and risk management solutions.

The recruits add to a team of 10 financial services experts at the UK company and will report to Steve Martin, a managing director of BearingPoint.

BearingPoint executive vice president John Condon said: "The targeted expansion of BearingPoint's financial services practice is part of a broader corporate focus in the UK. Given the country's standing as a leading business centre, BearingPoint will continue to commit appropriate resources in order to ensure a leading presence in the UK market across all industry sectors."

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3. LOGICACMG REORGANISES HERTFORDSHIRE

LogicaCMG has picked up a $17.5 million contract to work with Hertfordshire County Council on a five-year organisational change and managed services programme that will transform back-office operations.

The council's procurement, HR management, payroll and financial management will be consolidated into a single SAP-based solution, with the aim of delivering better management reporting, flexible working options, enhanced productivity and improved access to services and information.

Last year, LogicaCMG won similar deals from the London Borough of Haringey and Waltham Forest Borough Council.

For Hertfordshire Council, the project is intended to maintain its Audit Commission Comprehensive Performance Assessment ranking as the best performing of all 33 county councils in the country, on the grounds of good social services, finances and e-government readiness.

Council chief executive Caroline Tapster commented: "We operate one of the most innovative local authorities in the country, investing in technology and management processes that have proven successful in the private sector. LogicaCMG has worked closely with our internal project team to develop a solution that will maintain our ability to exceed central government targets and serve the needs of council taxpayers."

4. ACCENTURE FORECASTS 2004 GROWTH

Accenture is predicting revenue growth of 5-10% in fiscal 2004 on the basis of extra demand for improvements in existing IT systems and a surge in business process outsourcing (BPO), as clients continue to cut costs.

At a recent strategy briefing in New York, Accenture CEO and chairman Joe Forehand said companies need to use IT to react swiftly and differentiate themselves during the economic recovery, increasing market demand for IT services.

After two years in which Accenture reported new bookings of about $16 billion, its new bookings in the fiscal year to 31 August 2004 are expected to come in at between $16 billion and $18 billion, boosted by government business, BPO and emerging technologies such as radio frequency identification.

Accenture reported a revenue gain of 2% in fiscal 2003 to $11.8 billion. Its operating profit in the year to 31 August 2003 rose 10% to $1.6 billion for a margin of 13.1%.

Full-year revenues were boosted by a strong performance in the fourth quarter, when Accenture's operating profit more than doubled to $350 million, on revenues rising 12% to $3 billion (MCN Direct 2-35).

5. CAPITA PREDICTS RISE IN HR OUTSOURCING

Interest in outsourcing HR administration functions is growing, but HR directors do not have the power to make the contract purchasing decision.

According to research carried out by ORC International for Capita HR Administration among 800 HR and financial directors, 31% of HR directors are considering outsourcing their company's transactional HR processes. Some 35% of HR directors, compared to 26% of managing directors, initiate and take responsibility for the outsourcing process, but only 8% make the final purchasing decision, compared to 35% of managing directors signing on the line.

Once the decision to outsource is made, however, 21% of HR directors have the final say in choosing a supplier.

Commenting on the research, Capita HR Administration director Edward Brooks said: "HR administration - everything from changing employee details to providing reports for the board - represents a huge burden for any HR department. As a result, companies are choosing to outsource these processes in order to control costs and to focus on other business-critical areas such as work/life balance and talent management."

Organisations that have outsourced HR administration list the benefits as cost control (54%), access to new technology and skills (31%), reduced transaction costs (15%) and enhanced capability to develop new products and services (15%).

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