MCN Direct Newswire

Vol. 4 No. 20, 5 September 2005

This issue is sponsored by:

Mundane and NCC

This issue news

1. MCA sees surge in management consulting
2. LogicaCMG off to a good start
3. Indian firms share in €1.8bn ABN Amro deal
4. Mercer woos McKinsey partner
5. CSC secures £74m deal with British Nuclear
6. Further information - feedback/pass on to a colleague/remove from mailing list

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1. MCA SEES SURGE IN MANAGEMENT CONSULTING

The Management Consultancies Association (MCA) has reported growth in revenues from traditional management consultancy services after two years of decline.

Over 80% of MCA members recorded increases in management consulting in the second quarter of 2005, reversing declines of 8% and 9% respectively in 2003 and 2004. Year on year, management consultancy quarterly revenues rose 22% to reach £794 million.

According to the MCA, management consulting - which includes strategy, HR and marketing consultancy - drove industry growth in the quarter. Total MCA revenues rose 30.5% against last year's comparable period, reaching £1.8 billion. IT consulting rose 41% on last year's comparable period - and 5.6% on Q1 2005 - to £431 million.

But the MCA reported a 15% fall in outsourcing consultancy services between Q1 and Q2 2005, suggesting outsourcing work may have reached its peak.

David Bailey, MCA president and joint managing director of Impact Plus, said: "The revival in work from traditional management consulting is a good sign for MCA members and demonstrates that UK companies still strongly value consulting services such as strategy, HR and marketing. There is also more positive news as members predict strong sales in both management consulting services and IT work over the short to medium term."

The financial services sector promises the best growth, according to the MCA, with regulatory work and IT transformation consultancy fuelling demand.

2. LOGICACMG OFF TO A GOOD START

LogicaCMG has announced strong first-half financial gains and says its order book is up 50% on last year's comparable period thanks to outsourcing. Pre-tax profits in the six months to 30 June were 46% up on last year's first half, reaching £37.7 million. Revenue rose 11% to £891.7 million.

IT services - which represents 87% of total revenue - grew 11.4%, including a contribution from newly acquired Portuguese IT services firm Edinfor. Revenues from wireless networks - which represents 13% of group total - rose 7% with a major turnaround in profitability compared to the first half of last year.

Commenting on the results, LogicaCMG chief executive Martin Read said: "The long-term benefits of the Logica-CMG merger, in terms of scale and market positioning, are now very much in evidence. Earnings grew 33% in the first half and order intake was very strong, up 50% over the first half of last year. Outsourcing remains a key growth area, representing 24% of group revenues, and was a major factor in first-half order bookings."

Looking forward, Read said: "Having got off to a good start, performance for the year is expected to show a significant improvement over 2004 and positions LogicaCMG well as the IT industry develops." Revenue growth for the full year is forecast to be around 5% on an organic basis and 10% following the consolidation of Edinfor.

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3. INDIAN FIRMS SHARE IN €1.8bn ABN AMRO DEAL

Dutch banking group ABN Amro has named the beneficiaries of its €1.8 billion (£1.2 billion) group shared services IT initiative, selecting five vendors for a range of five-year contracts.

While individual contracts have not been valued, IBM has probably picked up the biggest with a deal to provide IT infrastructure to the bank. Of 2,000 IT staff who will transfer to the vendors, the majority will move to IBM. A further 1,800 will make up a new technology organisation within ABN Amro, while the bank's remaining 1,500 IT jobs worldwide will be cut over the next 18 months.

The application support and enhancement contracts within the ABN Amro initiative have been awarded to Infosys and Tata Consultancy Services. These two, along with a further Indian player, Patni, plus Accenture and IBM were also selected for application development.

For the Indian service suppliers, the contracts are a mark of their continuing success in winning overseas money and a milestone in being among the biggest contracts they have been awarded.

ABN Amro expects the group shared services IT initiative to save at least €256 million a year from 2007, with other shared services such as HR and real estate expected to push that up to €600 million.

Hugh Scott-Barrett, chief operating officer and member of ABN Amro's managing board, said: "The agreements with selected vendors allow us to use the latest technology to further improve the services we offer our clients. We expect that this IT programme that is shared across the bank will contribute to savings estimates made by the bank, while improving IT services within the group."

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4. MERCER WOOS MCKINSEY PARTNER

Mercer Delta, an organisational consulting firm and part of the Mercer family of companies within Marsh & McLennan, has hired ex-McKinsey partner Stephen Redwood as CEO of its UK operations.

At McKinsey, Redwood was a partner responsible for counselling CEOs on their leadership, particularly in transitional periods. Before this, he was a partner and global leader of the organisation practice at PricewaterhouseCoopers.

As CEO of Mercer Delta, Redwood will be responsible for growing UK business, using his 17 years of consultancy experience to help clients improve their leadership and organisational performance.

He replaces Margaret Exley who becomes chairman of Mercer Delta in the UK with a focus on key clients and practice development. Commenting on Redwood's appointment, she said: "The appointment of a heavyweight figure with an excellent international track record in consultancy work bolsters our UK team and helps meet our clients' demands for very specialist organisational consulting advice."

Mercer Delta works to address the effectiveness of a company's CEO and top team, the quality and capability of leadership, issues of succession planning, the suitability of structure and management processes, and the relevance of the company's culture.

5. CSC SECURES £74m DEAL WITH BRITISH NUCLEAR GROUP

CSC has agreed a £74 million, five-year IT outsourcing contract with British Nuclear Group (BNG), a business organisation within British Nuclear Fuels that provides nuclear site management, decommissioning and clean-up services.

CSC will manage BNG's IT operations, supporting about 12,000 users at locations across the UK. The contract is aimed at reducing costs and improving the productivity of BNG's IT activities and supersedes a previous five-year outsourcing contract awarded after a competitive tender to CSC by British Nuclear Fuels (BNFL) in 2000 to provide similar services.

CSC is also working on a business change project being implemented across sites managed and operated by BNG. The project, which will finish later this year, will provide infrastructure upgrades as well as a new integrated suite of project and financial control processes, systems and training for staff.

Guy Hains, president of CSC Europe, said: "The signing of this agreement represents an important milestone in the evolution of CSC's relationship with the BNFL group."

Hains became head of CSC's European group last October, replacing George Bell, who has since worked in the group leading major projects. Bell has now set out for Asia where he will be president of CSC's Asia group, replacing Mike Brinsford who returns to a senior executive position in Europe.

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