MCN Direct Newswire

Vol. 4 No. 2, 7 February 2005

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This issue news

1. Accenture in UK recruitment drive
2. ITNet subsumed by Serco
3. EDS and CSC win Sun IT services contracts
4. Capita takes £14m contract in Ireland
5. Axon shows market strength
6. Further information - feedback/pass on to a colleague/remove from mailing list

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1. ACCENTURE IN UK RECRUITMENT DRIVE

Accenture is planning a significant UK recruitment drive, reflecting its recent financial success and growing demand in the public and financial services sectors.

In March - described by Accenture as "careers month" - the consultancy will launch a recruitment drive designed to attract 2,700 experienced hires this year. It is also planning to take on 750 graduates, instead of its usual 500.

Accenture's UK success was evident in the company's first-quarter results (MCN Direct 4-1). A closer look reveals UK revenue growth of 19% in the year to 31 August 2004, breaking the £1 billion revenue barrier at £1.3 billion. Accenture does not declare profitability by country, but confirmed its UK business was profitable in fiscal 2004.

Among its latest UK wins is a £306 million, 10-year contract with BT that extends a previous five-year deal. Under the terms of the new arrangement, Accenture will continue providing business process outsourcing (BPO) and business transformation for HR administration services for BT's 87,000 employees and 180,000 pensioners in the UK, but also extend those services to a further 10,000 BT employees in 37 countries. BT's aim is to achieve higher levels of workforce management and performance services, as well as additional cost savings.

Accenture claimed the new contract - which will take effect on 1 August 2005 - is "one of the largest renewals of an HR BPO contract in the world". The consultancy said it would deliver services including payroll and benefits administration, recruitment, pension administration, performance management administration and HR advisory and information services through Accenture HR Services.

BT group HR director Alex Wilson commented: "Accenture HR Services has a proven track record of consistently high-quality service and a true partnership approach. These were key factors in its selection, along with its unmatched ability to deliver HR services on a global basis." .

2. ITNET SUBSUMED BY SERCO

ITNet's days are numbered following Serco's statement that its £235 million cash and share offer for the company is now unconditional in all respects.

Services giant Serco extended its offer for Birmingham-based IT services group ITNet last month (MCN Direct 4-1), but said last week that all conditions of the offer had been satisfied and that final approval for the admission of new Serco shares on the London Stock Exchange had been given.

ITNet is expected to cease to be a listed Stock Exchange company on 7 March, after which there will be no publicly traded market for its shares.

While Serco and ITNet are bullish about the acquisition, analysts suggest that ITNet may be eclipsed by the size of its new parent. In 2003, ITNet reported revenues of £185.5 million, against Serco's £1.6 billion.

Serco maintains the acquisition will extend its scope in the IT services market - a small part of the company's predominantly public sector services work - with executive chairman Kevin Beeston commenting: "The addition of ITNet will enhance Serco's capability to compete for larger and higher-value contracts across the broader customer base in the expanding business transformation and local government outsourcing markets, and in those sectors that ITNet does not serve. I am confident the enlarged group will create additional value."

Serco's mission will not be easy, however, as major services providers chase business transformation contracts and increasingly higher-value local government work, while dedicated local government outsourcing suppliers such as Capita and Liberata continue to build their client portfolios.

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3. EDS AND CSC WIN SUN IT SERVICES CONTRACTS

Sun Microsystems has outsourced its global applications management and data centre services to CSC and EDS in an effort to cut costs and be more responsive to market dynamics.

CSC has won a $360 million (£192 million), five-year contract to provide applications development and support services for Sun's operations across Europe, the US and Asia-Pacific. CSC will manage all Sun's internal business systems, including finance, manufacturing, messaging, ERP, CRM and data warehousing applications.

Sun chief information officer Bill Vass said: "Flexibility is one of the greatest competitive weapons in the IT industry. CSC will help us to achieve this nimbleness and ensure that Sun's IT infrastructure is run as effectively as any company's."

EDS has yet to finalise its deal with Sun but said it is in exclusive negotiations over an eight-year services agreement to transfer Sun's data centres to the EDS Agile Enterprise Platform, its global delivery system.

Financial details of this extension to an existing data centre contract were not disclosed, but any new agreement will include the partners delivering IT services such as utility computing based on Sun's Solaris range.

Vass commented: "By moving Sun back-office functions such as helpdesk to EDS' front office, Sun can better focus its resources on the innovation that is the core of our company."

4. CAPITA TAKES £14m CONTRACT IN IRELAND

Capita has secured a £14 million, three-year contract with Ireland's fixed telecoms provider Eircom, adding to its references in the telco market and expanding its operations in Ireland.

The deal requires Capita to provide a managed services solution for Eircom's outbound customer call centre in Dublin and the TUPE transfer of 200 call centre staff in the company's existing telesales centre.

Eircom said Capita was selected for its "strong track record in providing cost-effective call centre solutions across a number of industry sectors". Capita executive chairman Rod Aldridge added: "This agreement presents an exciting opportunity for Capita in Ireland where we have a growing presence in the financial services market and aspirations to add value in other market sectors."

Separately, Capita secured a £250,000, five-year contract with ACE European Group to provide managed payroll services to over 1,200 of the insurance group's UK employees. Capita claimed that the contract, which will be run out of its Edinburgh office, is the first to provide a managed solution based on PeopleSoft's payroll engine.

5. AXON SHOWS MARKET STRENGTH

Business transformation and SAP specialist Axon is riding the market upturn and expects to exceed financial expectations when it reports preliminary 2004 results next month.

Axon expects to report year-on-year pre-tax profit up around 40% and revenue up 20%, showing pre-tax profit of not less than £7.1 million on revenue of around £60 million.

CEO Mark Hunter said: "Our focus on the needs of large organisations that have chosen SAP continues to deliver results. We are winning new clients and market share based on the quality and value of our people and our business transformation proposition. We are now the number one company of our type in the UK."

Since its London Stock Exchange listing in 1999 - when it reported pre-tax profit of £4.6 million on revenue of £25.4 million - Axon has weathered the IT downturn to make 2003 pre-tax profits of £4 million on revenues of £50.2 million.

Its 2004 results are expected to reflect not only an upturn in the overall market but also demand for Axon's business transformation proposition across Europe, the Americas and the Middle East.

Looking forward, Hunter commented: "We have already made an excellent start to 2005 and we are confident we will deliver both revenue and profit ahead of current market expectations."

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