MCN Direct Newswire

Vol. 2 No. 16, 28 April 2003

This issue is sponsored by:

Lawson Software, Microsoft Business Solutions and FormScape

This issue news

1. CGEY puts employees up for hire
2. EDS takes first steps to revival
3. Accenture ahead in second quarter
4. BearingPoint opens centre in China
5. IBM makes strong start to 2003
6. Further information - feedback/forward to a colleague/unsubscribe

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1. CGEY PUTS EMPLOYEES UP FOR HIRE

Cap Gemini Ernst & Young (CGEY) UK has set up a service to sell its technology experts on a temporary basis to companies needing an IT resourcing solution.

Called Professional Services, the operation comprises 200 dedicated staff, mostly transferred from within CGEY and all on the CGEY payroll. The aim is to grow that number by 50% this year and move the group out of CGEY to become the UK arm of Sogeti - the CGEY-owned company that operates in the technical assistance markets in the US, Scandinavia, Benelux and France.

CGEY claimed that professional services is not a way of utilising consultants who are 'on the bench'. Instead, it said the service is a reaction to acute demand in the market for temporary IT staff after companies have trimmed jobs and moved from fixed to flexible cost bases, but still have deadlines to meet.

According to CGEY, Professional Services will deliver experienced IT practitioners "trained to CGEY standards", for as long or as short a timescale as is required and in whatever numbers are specified "subject only to CGEY UK's total employee headcount of 7,000".

Simon Wayne, vice president of Professional Services, claimed that Professional Services' differentiators are its understanding of emerging technologies and its ability to build skills in these areas, its access to CGEY's offshore resources, and the fact that inhouse staff maintain a career mindset that is not always apparent across contract agencies.

Wayne said the utilisation rate within Professional Services is almost 70% and rising, adding: "We've got traction, a client base and we are promoting the service. In two to three years' time we'd like to be a market leader."

2. EDS TAKES FIRST STEPS TO REVIVAL

EDS could face more job cuts and asset sales as new CEO Michael Jordan struggles to revive the company's outsourcing business. Jordan has yet to make a definitive statement on future strategy, but is expected to present a plan of action by the end of June.

EDS has postponed the release of its first-quarter financial results, saying the delay gives its new management team "additional time before communicating with the market". The results were scheduled for release on 23 April and will now be announced on 7 May.

The delay does give Jordan, president and chief operating officer Jeffrey Heller and CFO Bob Swan more time to review the numbers. But some analysts suggest the date has been pushed back because irregularities have been found in EDS' financial accounts and must be resolved before a public announcement is made.

EDS denies this claim and, while the market awaits the results, has been promoting even the smallest contract extensions, and has made a major announcement of a minor change to its business process outsourcing (BPO) services.

Detailing a series of new and expanded BPO contracts valued at $117 million, EDS said it had changed the name of its BPO delivery unit to EDS Business Process Services to reflect the range of processes and IT services it offers. Under the Business Process Services banner are customer relationship management, financial process management, and administrative and enterprise-shared services, including HR, procurement and finance and accounting.

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3. ACCENTURE AHEAD IN SECOND QUARTER

Accenture has exceeded analysts' estimates for the second quarter, reporting net profit of $118.8 million on revenues down 3% at $2.8 billion.

In last year's comparable quarter, Accenture reported net profit of $10.6 million after significant restructuring costs, on revenues of $2.9 billion.

Outsourcing revenues rose 33% against last year's comparable figure to $828 million, representing 29% of total revenues. Consulting revenues fell 15% to $2 billion.

Noting that outsourcing "continues to be an area that the company is targeting for growth", Accenture said the cost of services for the quarter to 28 February rose 6% to $1.8 billion - or 64% of revenues - primarily due to a $218 million increase in outsourcing contract costs.

Revenues rose by 5% and 12% respectively in the company's communications & high tech and government operating groups, but were down 5% in financial services, 10% in the products group and 12% in resources.

Revenues rose 2% across Accenture's Europe, Middle East and Africa region and 7% in Asia-Pacific, but fell 9% in the Americas.

Accenture chairman and CEO Joe Forehand said: "We are pleased with Accenture's solid performance in the second quarter, especially taking into account the challenging economic and geopolitical environment in which we continue to operate. We had strong contract bookings in the quarter of $4.75 billion, the second highest in our company's history."

Looking forward, Accenture expects third-quarter revenue growth to be in the range of plus or minus 2% and continues to forecast a full year gain of 0-2%.

* Accenture plans to create an extra 150 jobs in Ireland before the end of this year. The jobs will boost an existing workforce of 800 and will be at the company's Dublin-based European service centre. The centre was opened in 2000 to centralise support for Accenture's business across Europe and has recently taken on management of the company's global procurement function.

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4. BEARINGPOINT OPENS CENTRE IN CHINA

BearingPoint has opened a global development centre in Shanghai, China, promising cost-effective application development, support and maintenance.

The centre, claimed to be the first of its kind in China, is a component of BearingPoint's AnyShoreSM strategy and allows clients to keep project management, design and analysis onshore, while moving software development and support offshore. As well as working with clients seeking offshore services, the centre will supply customers in the more local market of Asia-Pacific.

BearingPoint chairman and CEO Rand Blazer said: "The Shanghai development centre provides clients with cost-effective facilities, a highly skilled technology workforce and an incubator for IT development. With its economy growing at a rate of 80% annually, China has a young and growing IT market. For companies needing to cut costs and maximise return on their IT investments, China offers ideal conditions."

BearingPoint's first business partner at the centre is webMethods, an integration software supplier that will work with the consultancy to meet customer demand in the Asia-Pacific region. BearingPoint plans further strategic alliances that will allow the Shanghai centre to offer best of breed systems.

5. IBM MAKES STRONG START TO 2003

IBM has reported first-quarter net profit up 16% at $1.4 billion, on revenues rising 11% to $20.1 billion. IBM Global Services led the way with revenues, including maintenance and "aided by the addition of the former PwC Consulting", up 24% at $10.2 billion.

Revenues excluding maintenance rose 27%, while the gross profit margin on services dropped from 26% in last year's first quarter to 24.9%. IBM said it signed services contracts worth $12 billion in the quarter and ended the period with an estimated order backlog of $113 billion.

Software revenues rose 8% in the quarter to $3.1 billion, including a one-month contribution from Rational Software, which IBM bought for $2.1 billion in February to support its middleware products. Total hardware revenues fell 1% to $5.8 billion.

On a geographic basis, revenue rose 5% to $8.6 billion in the Americas. In Europe, the Middle East and Africa revenue was up 23% at $6.3 billion, while Asia-Pacific pushed up 14% to $4.5 billion. OEM revenues fell 15% to $690 million.

Sam Palmisano, IBM chairman and CEO, said: "In the face of an ongoing difficult environment, we delivered another strong quarter and continued to gain share across our strategic businesses. Going forward, we are well positioned to set the agenda and help customers transform their enterprises to realise the benefits, efficiencies and productivity gains of e-business on demand."

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