MCN Direct Newswire

Vol. 2 No. 31, 26 August 2003

This issue is sponsored by:

IBM, OpenAccounts, Xansa and Epicor

This issue news

1. MCA forecasts spending growth
2. Mercer creates HR technology practice
3. Getronics shows signs of recovery
4. Atos Origin holds firm in second quarter
5. Deloitte names UK consulting leaders
6. Further information - feedback/forward to a colleague/unsubscribe

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1. MCA FORECASTS SPENDING GROWTH

The UK Management Consultancies Association is predicting increased spending on consultancy in the third quarter, following a gain of 2.1% in member revenues during April-June.

According to the MCA's latest report, the 2.1% gain to $1.96 billion was supported by 20% growth in outsourcing revenues since the second quarter of 2002. Outsourcing revenues were also up on the first quarter of this year, showing an 8.4% rise to $512.9 million.

In contrast, revenues from management consulting services fell 1.4% quarter on quarter to $998.8 million, while IT consulting revenues rose 3.3% to $449.6 million.

MCA executive director Bruce Petter said: "It is encouraging that member firms' revenues have increased for three consecutive quarters. This growth is testament to the ability of management consultants to continue to offer clients value for money despite changing economic circumstances."

Explaining the advance in outsourcing, Ian Watmore, MCA president and UK managing director of Accenture, added: "Companies and government agencies have shed a great deal of cost through outsourcing their IT departments. Taking those savings to the bottom line is tactically attractive. But many also realise that there is a strategic value in re-investing these savings to help them transform legacy IT to meet their newly affirmed business strategies."

Looking forward, MCA members expect an upturn in spending in the third quarter, with IT and outsourcing projects generating revenue growth and the public sector showing the best prospects ahead of overseas projects, transport and communications.

2. MERCER CREATES HR TECHNOLOGY PRACTICE

Mercer has formed a 200-strong global practice dedicated to human resources technology and operations consulting. The practice will be part of Mercer Human Resource Consulting - a 13,000-strong company within Mercer Inc - and will be led in the UK by Avgi Gregory, ex-head of Mercer's UK e-business group.

Gregory said: "Many companies recognise, not just within HR but at corporate level, that technology has strategic importance for the effectiveness of HR operations. Companies are spending $45 billion on HR technology globally and it is important that Mercer plays its part in helping organisations make the right decisions and get the best return on their investment."

The HR technology and operations practice will provide both advisory and delivery services, including overall strategic advice, design and delivery of best-of-breed technology and project management during implementation.

Specific consulting areas will include HR portals, decision support tools and data analytics, while Gregory also notes the need to meet growth in demand for technology supporting HR service centres, integrated health management solutions and pension administration programmes.

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3. GETRONICS SHOWS SIGNS OF RECOVERY

Getronics has pulled back from the brink of disaster, reporting a first-half net profit of $257 million, up from $4.5 million a year ago, on revenue down 26% at $1.6 billion.

The Amsterdam-based IT services and solutions provider attributed its profit rise to a net tax gain of $82.7 million and to income from the sale of non-core businesses and discontinued operations of $291.8 million.

The revenue drop resulted primarily from the divestment of Getronics Government Solutions and Getronics Human Resource Solutions.

The company said it continued to experience a tough and competitive market, but pushed services revenues up to 73% of total from 71% in the first half of 2002, as it refined its product-services mix.

The first signs of market stabilisation were seen in the second quarter in the Netherlands, Spain, the US and Australia, although Getronics does not expect any meaningful improvement in market circumstances this year.

Claiming to have lifted the "dark cloud that was hanging over Getronics", chairman Axel Ruckert and vice chairman Klaas Wagenaar said: "In the company's 2002 annual report, management concluded that there was uncertainty as to whether Getronics would be able to continue as a going concern. As a result of the actions taken by the company in 2003, management believes that such uncertainties no longer exist."

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4. ATOS ORIGIN HOLDS FIRM IN SECOND QUARTER

Atos Origin achieved a 3.4% rise in its second-quarter revenues to $859 million, despite softness in some European markets and adverse currency movements that reduced its revenues from the UK, Americas and Asia-Pacific.

Atos Origin met its expectations for the quarter to 30 June and benefited from a revenue contribution of $97 million from Atos KPMG Consulting - the result of its acquisition of KPMG Consulting in the UK and Netherlands in August 2002.

On a country basis, Atos Origin reported resilient sales in France, particularly of outsourcing services, while the Netherlands benefited from a strong base of recurrent outsourcing revenue and a steady flow of new orders coming online.

Other continental European markets remained difficult, with the rest of the company's EMEA region showing a decline in revenues.

Atos Origin said pricing pressure continued in the consulting and systems integration markets through the second quarter, pushing revenues down 15% year-on-year. But it noted that "the volume declines of the past 18 months appear to have levelled off and improved slightly".

Revenues from managed services in the first quarter were $450 million, down 3.4% on last year's comparable period. A steady inflow of orders through the first half of 2003 is expected to drive modest growth from managed services in the second half of the year.

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5. DELOITTE NAMES UK CONSULTING LEADERS

Deloitte & Touche has chosen its UK consulting leaders following the integration of Deloitte Consulting back into the audit firm (MCN Direct 2-21) and ahead of a rebranding that will see consultancy marketed under the name Deloitte.

Nick Griffin, former head of Deloitte & Touche's expanded business consulting practice following the arrival of 400 Andersen consultants a year ago, takes the top slot as UK managing partner for consulting.

He is joined by Nick Owen, who was UK managing partner for consulting at Andersen, as leader of the professional services, manufacturing and life sciences, and energy, infrastructure and utilities sectors. Also ex-Andersen is Jolyon Barker, who will head up the consulting practice's telecoms and media business.

Former Deloitte Consulting partners Peter Allred, Howard Lovell and Gerry Boyle will lead the public, financial services and consumer business sectors respectively.

The rebranding, which will be effective from 1 September, makes use of a separate legal entity entitled Deloitte Consulting Ltd. This company will house the consultancy practice and report to Deloitte & Touche LLP in the UK, which in turn is a member of the global umbrella organisation Deloitte Touche Tohmatsu.

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