MCN Direct Newswire

Vol. 3 No. 40, 15 November 2004

This issue is sponsored by:

TeleWare and The Consulting Industry Report 2003/4

This issue news

1. Rand Blazer quits BearingPoint
2. Capgemini to cut UK jobs
3. CSC benefits from European revenue rise
4. Parity picks EDS veteran to lead outsourcing
5. Atos Origin returns to growth
6. Further information - feedback/pass on to a colleague/remove from mailing list

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1. RAND BLAZER QUITS BEARINGPOINT

BearingPoint chairman and CEO Rand Blazer quit the company last week, surprising not only his colleagues but also the industry at large. Neither BearingPoint nor Blazer would comment on why he made such a sudden move - handing in his resignation and leaving on the same day.

BearingPoint's board named Rod McGeary as CEO and chairman while it conducts a search for a permanent successor.

McGeary been a member of BearingPoint's board since August 1999 and paid tribute to Blazer, saying: "BearingPoint appreciates Rand's service and contribution to the company while serving as chairman and CEO. His leadership has been instrumental in the growth of the company into a global organisation."

Blazer was a KPMG veteran who in 1997 became one of a two-person executive team directing KPMG Consulting's global services. He then took charge of the consultancy's split from parent KPMG, its IPO and later rebranding as BearingPoint. He became CEO in April 2000 and chairman in February 2001.

As well as piloting the launch of BearingPoint, Blazer masterminded the consultancy's expansion through the acquisition of a number of ex-KPMG Consulting and Andersen business consulting units worldwide.

His only comment on leaving the company was: "With Mr McGeary's experience, insight, knowledge and familiarity with how BearingPoint operates, I am confident the company will continue with its strategic growth plan and enhance its elevated status within the industry."

* Following last week's announcement of third-quarter results (MCND 3-39), BearingPoint confirmed guidance for the fourth quarter of revenue in the range of $850-870 million.

2. CAPGEMINI TO CUT UK JOBS

Capgemini is planning job cuts in the UK and elsewhere as it takes steps along the road to financial recovery. The company had a disastrous first half in terms of profitability (MCND 3-31), but is living out the claim it made at the interim that "revenues are now well underway to resuming a growth track" with the sale of its stake in BPO specialist Vertex and a rise in third-quarter revenue.

Revenues climbed 21% on last year's comparable quarter to 1.6 billion euros (£1.1 billion). Europe steamed ahead with the US relatively flat, while outsourcing - particularly the UK Inland Revenue and US TXU contracts - was a major driver for growth.

But with low operating margins, Capgemini is continuing to trim costs. It plans to axe 1,000-1,500 jobs in the UK and 19 other countries for expected savings of 100 million euros next year.

The company said: "In the UK outsourcing business, we have confirmed to staff that there will be redundancies in our application management and data centre businesses. This is in line with market conditions that have become increasingly competitive and financially restrictive. We are doing everything possible to minimise the number of compulsory job losses by redeploying people and offering a voluntary redundancy programme."

Capgemini is also realising its 14.6% equity stake in BPO specialist Vertex by selling it back to parent company United Utilities for £47.5 million cash. Capgemini originally teamed up with Vertex in February 2001 when it handed its call centre BPO business to Vertex and the latter outsourced its existing IT infrastructure work to Capgemini.

While Capgemini has relinquished its hold on Vertex, it said it would continue to work with the company on the provision of call centre and customer management solutions.

Sponsor

The Management Consultancies Association

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3. CSC BENEFITS FROM EUROPEAN REVENUE RISE

CSC has reported strong second-quarter growth, buoyed by a gain of 21.5% in its European turnover.

Revenues across Europe topped the $1 billion mark (£559 million) - in the process overtaking CSC's US commercial revenues, which rose 2.4% over the quarter to $929.2 million.

CSC said its global commercial and European revenues were the beneficiaries of "meaningful new IT services engagements and favourable currency exchange rate movements" in the three months to 1 October.

Worldwide, the IT services firm recorded a 21% gain in net profit to $130.5 million for the quarter, on revenue rising 9.6% to $3.9 billion.

CSC chairman and CEO Van Honeycutt commented: "The demand environments for short-term commercial consulting and systems integration services continue to differ based on geography. In North America, second-quarter revenue improved slightly both sequentially and year-over-year, while the demand for similar services in Europe and Asia-Pacific remains soft with engagements remaining very price competitive.

"Revenue generated from new, large and long-term engagements in Europe continues to offset the effect of soft demand for shorter-term project work in that market."

4. PARITY PICKS EDS VETERAN TO LEAD OUTSOURCING

IT services specialist Parity has named ex-EDS executive Dave Conkleton as head of its outsourcing operations.

Conkleton joins Parity after 19 years in client management positions with struggling outsourcing giant EDS. Most recently, he led a number of major outsourcing projects in the financial services industry, among them a multi-million pound IT contract with Barclays.

His job at Parity will be to expand the company's outsourcing services into the corporate mid-market and public sector, which Parity feels are under-serviced by larger players in the market.

Conkleton described Parity as "a company of strong pedigree with massive potential for further growth".

Parity CEO Ian Miller returned the compliment saying: "Conkleton is exactly what the company needs to steer its current outsourcing drive. Having worked on a number of multi-million pound contracts, he has an impeccable track record and I'm sure will do an excellent job."

5. ATOS ORIGIN RETURNS TO GROWTH

Atos Origin has recorded its first quarter-on-quarter growth since 2002, albeit a meagre 0.9% excluding its acquisition of consultancy Sema back in January.

Including Sema's contribution, third-quarter revenues reached 1.3 billion euros (£908 million), a gain of 75% on last year's comparable period.

The company's consulting and systems integration business fell 4.2% in the quarter to 30 September, with managed operations - the main plank of Atos Origin's strategy - up 5.9%.

The UK and The Netherlands led regional growth on 7% and 4.5% respectively, with France falling 3.6%.

Looking forward, Atos Origin said the integration of Sema and consequent restructuring plans are on track and that it expects to achieve an operating margin in excess of 7% for the year and revenues just below 5.3 billion euros.

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