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For UK consultants and systems integrators (CSI’s)

Vol. 4 No. 4, 7 March 2005

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This issue news

Axon sets up executive retention scheme
Newell & Budge grows global workforce
Tories question EDS contract win
Capgemini clinches £20m energy deal
LogicaCMG back in the black
Further information - feedback/pass on to a colleague/remove from mailing list

RECRUITMENT NEWS

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1. AXON SETS UP EXECUTIVE RETENTION SCHEME

Business transformation consultancy Axon Group has created an executive reward scheme aimed at recruiting and retaining senior individuals, together with an employee benefit trust that will reward and motivate a larger group of high-performing staff.

The company's three founder shareholders have committed a total of 4.9 million shares - about 10% of the company's issued share capital - to the executive reward scheme, which gives senior executives the option of buying shares at £2 each and exercising them after three years if the price has increased by 150% to over £5.

Announcing the reward schemes alongside strong financial results for 2004, Axon chairman and CEO Mark Hunter said the initiatives were intended to support the recruitment and retention of senior staff - a critical success factor for the company.

In line with earlier indications (MCN Direct 4-2), Axon reported a 58% gain in pre-tax profit to £6.3 million for 2004, on turnover rising 20% to £60.3 million. Its headcount rose 43% over the year to reach 547, with consultants accounting for 80% of the total.

Axon anticipates a high level of recruitment activity being sustained through 2005 as it continues to grow its SAP implementation, business consultancy and applications management business in the UK, continental Europe, the Middle East and south east Asia. The company is also planning expansion into the US where it sees opportunities for its SAP implementation business and is looking for a merger partner to kick-start progress.

Looking forward, Hunter noted a new £16.5 million, five-year contract with Manchester City Council to improve citizen services based on a SAP platform and commented: "We have started 2005 with the largest order book in our history. We have also embarked on several exciting initiatives such as our strategic expansion in the US and the creation of the partner model that is funded by the executive reward scheme."

2. NEWELL & BUDGE GROWS GLOBAL WORKFORCE

Edinburgh-based IT consultancy Newell & Budge is building its capacity in south-east England and India after opening its first London office and acquiring offshore IT development company Momentum Technologies.

The company has about 500 UK staff and plans to increase this by up to 20% this year, as it populates a London office opened in Lombard Street last week to serve clients in the south east. Experience being sought includes business change, business intelligence, project management and business analysis.

The Momentum acquisition will become Newell & Budge's first dedicated offshore development centre. The company has a sales operation in Vancouver and a development centre with capacity for 200 staff in Noida, Delhi from where it serves US and Canadian clients.

Newell & Budge intends to invest in the business, recruiting an extra 100 staff over the next six months to cope with growth in the North American business and to service UK clients. Newell & Budge CEO Ann Budge commented: "This acquisition is the next logical step in our offshore strategy. We have been working for over seven years with Indian partners, delivering a number of very large projects in that time. Momentum gives us access to a highly technical offshore facility that complements our UK workforce."

Mike Cast, an industry veteran and former board director of Mastek, has joined Newell & Budge as a non-executive director to help with the integration of Momentum.

3. TORIES QUESTION EDS CONTRACT WIN

The Conservatives have chastised the Government for awarding a £4 billion Ministry of Defence Information Infrastructure (Future) contract to EDS, saying the deal should not be confirmed until a National Audit Office enquiry decides whether EDS or the Government was to blame for last year's systems failure at the Child Support Agency (MCN Direct 3-42).

The Tory attack followed the MoD's selection of the EDS-led Atlas consortium, rather than the Radii consortium led by CSC, as preferred bidder for the £4 billion, 10-year contract.

The deal is EDS' largest single win since 2002 and will be a relief after a number of humiliations in the UK public sector - including problems at the Department of Work and Pensions, the loss of the Inland Revenue Aspire contract to Capgemini and failure at the Child Support Agency - and widely reported financial losses on its US Navy Marine Corps contract.

Graham Lay, managing director of EDS defence and leader of Atlas, said: "This is one of the most demanding and exciting single IT infrastructure projects ever undertaken anywhere in the world and we look forward to working with the MoD to make DII Future a success. The MoD's decision to select the EDS-led Atlas consortium vindicates our decision to bring together a team that offers low risk, cashable benefits and assured delivery."

EDS' partners in Atlas include tier one partner Fujitsu Services - which like EDS has significant MoD experience - and key subcontractors General Dynamics, LogicaCMG and EADS Defence and Security Systems. IBM and HP are also expected to play minor roles having come late to the Atlas consortium when their own bidding consortia were knocked out of the race (MCN Direct 3-19).

The Radii consortium, led by CSC and including BT, Capgemini and Thales, was the last survivor to compete against Atlas.

While the MoD has pre-negotiated terms for the entire 10-year project with Atlas, it has only named the consortium as preferred bidder for the first increment of DII Future. This is worth £2.3 billion over 10 years and will concentrate on maritime work. Increments two and three, covering land and air, will be awarded to Atlas depending on the successful outcome of increment one. EDS expects to finalise the increment one contract within 30 days and begin work next month.

The armed services' Future project is intended to consolidate more than 100 information networks in a single next-generation infrastructure linking about 150,000 desktop terminals and 300,000 users in 2,000 locations.

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4. CAPGEMINI CLINCHES £20m ENERGY DEAL

Capgemini has beaten four contestants to a £20 million, five-year IT outsourcing contract with British Energy, the producer of 20% of the country's electricity.

Under the contract, Capgemini will support about 6,500 users and 300 servers at British Energy power stations and offices across the UK. It will also provide applications management for core systems including finance, HR and document management.

Capgemini has supported other areas of British Energy's IT for the past three years and was chosen for the additional contract on the basis that it combined the best technical solution with good value for money.

A total of 28 British Energy staff and contractors will transfer to Capgemini as a result of the deal. British Energy is based in Livingston, Scotland, and will be supported by services from Capgemini offices in Glasgow, Inverness and Birmingham.

Commenting on the contract, British Energy information management manager Andrew Ralston said: "Capgemini has already proved its ability to innovate to good effect and to enhance quality of service while driving down costs. Under the new contract we are looking to spread these same benefits to other parts of our crucial IT support function."

5. LOGICACMG BACK IN THE BLACK

LogicaCMG has recovered from three years of financial losses to report a pre-tax profit of £42.2 million in 2004, though revenues dropped 2% to £1.7 billion.

The company had been struggling to benefit from the 2002 merger of Logica and CMG, but after integration and cost cutting programmes believes it will make significant progress in 2005, having returned to organic revenue growth in the second half of 2004.

LogicaCMG pushed its IT services revenue up to 86% of total last year. Its UK operation - 41% of revenue - achieved a strong performance, particularly in the public sector. The company also achieved its ambition of growing outsourcing revenue, pushing up the total from 20% to 23% of group total.

Commenting on the results from IT services, chief executive Martin Read said: "We closed 2004 with a strong book-to-bill ratio and a return to organic growth during the second half. We began this year with a good pipeline and expect to further strengthen the order book in the first quarter and increase the momentum in our outsourcing business."

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