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For UK consultants and systems integrators (CSI’s)

Vol. 4 No. 5, 14 March 2005

This issue is sponsored by:

This issue news

MCG plans recruitment drive
LogicaCMG builds UK outsourcing base
Merger rumour surrounds Atos Origin and SBS
BT nets $3bn Reuters contract
Renault drives three-way outsourcing deal
Further information - feedback/pass on to a colleague/remove from mailing list

RECRUITMENT NEWS

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1. MCG PLANS RECRUITMENT DRIVE

Management Consulting Group - parent of operational improvement consultancy Proudfoot and financial management specialist Parson Consulting - is planning significant recruitment activity this year after a successful turnaround in 2004.

Chief executive Kevin Parry said: "We will be big recruiters this year. Both Proudfoot and Parson are in recruitment mode and we will take on as many people as we need to meet rising client demand."

In 2004, Management Consulting Group (MCG) added 38 staff, predominantly consultants, for a total of 757. This year it is looking for client-facing professionals at all levels to work in its US, continental European and UK businesses.

After a year of restructuring at Parson Consulting - with the help of Proudfoot operational consultants - and improved sales at Proudfoot, MCG chairman Rolf Stomberg said 2004 delivered "the best results for shareholders in a decade".

After reporting a pre-tax loss of £3.9 million in 2003, MCG closed 2004 with a pre-tax profit of £8.5 million on turnover up 35% at £119.2 million. Proudfoot Consulting achieved a 19% rise in turnover of £81.4 million - or 68% of group turnover. Parson Consulting transformed a 2003 loss of £4.2 million into an operating profit of £2.3 million on turnover up 85% at £37.8 million.

The financial consultancy's success was driven by the sale of Sarbanes-Oxley related services as well as new services to help US and European clients manage financial regulatory requirements.

Looking forward, Stomberg and Parry expect further growth through 2005 and note a cumulative order book for both Proudfoot and Parson that is up 10% since the beginning of the year.

2. LOGICACMG BUILDS UK OUTSOURCING BASE

LogicaCMG is claiming good progress in the development of its UK outsourcing base in Bridgend, Wales. The company said it is responding to increasing demand for its outsourcing services as it adds jobs under a framework set out for Bridgend a year ago.

Supported by Regional Selective Assistance grant aid from the Welsh Assembly Government, LogicaCMG laid down plans to add 750 jobs to its existing base of 350 people working at Bridgend and other locations in Cardiff in March last year.

As well as the Bridgend outsourcing base, LogicaCMG has centres in Bangalore and Prague, which together form its blended sourcing proposition that allows customers to outsource onshore, nearshore or offshore.

The company's commitment to outsourcing is reflected in recent financial results, which show outsourcing represented 23% of total group turnover in 2004, up from 20% in 2003 (MCN Direct 4-4).

The Bridgend investment and development programme covered two phases. The first phase was intended to add 350 jobs in IT outsourcing, while the second planned the addition of 415 people, to deliver business process outsourcing as part of the company's global service delivery operation.

• AON subsidiary Combined Insurance has awarded LogicaCMG a £4 million contract to extend the company's Endeavour infrastructure and management system from its Australian division into its UK and Ireland operations.

3. MERGER RUMOUR SURROUNDS ATOS ORIGIN AND SBS

Atos Origin is believed to be in talks to acquire Siemens Business Services (SBS), with a view to strengthening its market position in Germany.

Neither company would comment on the industry rumour, but analysts suggest an acquisition by Atos Origin of the Siemens IT services business would be a good fit for the French services firm as it would add significant presence in Germany where Atos Origin is relatively weak.

Atos Origin has a total worldwide workforce of about 45,000 with 8,500 staff in France, 7,000 in the UK and only 2,100 in Germany. SBS has a total of 36,000 employees but is suffering from over-capacity in Germany. The company recently indicated that it would cut jobs in Germany but pulled back from this after the arrival of new Siemens CEO Klaus Kleinfeld at the end of January.

Kleinfeld has said he is open "to all options" in relation to SBS and has not ruled out selling the division.

SBS has never proved its potential within Siemens and could be another example of a captive services business that would do better operating in the mainstream IT services market.

In the year to 30 September 2004, SBS turned in profit of €40 million (£28 million) against €13 million a year earlier - but the gain was the result of a €93 million sale of a subsidiary rather than organic growth. Sales in 2004 fell 9% to €4.7 billion.

Speculation about the companies' intentions mounted as Atos Origin prepared to release fiscal 2004 results this week. An earlier trading statement suggested Atos Origin would turn in group revenue of 5.3 million, an increase of 75% on 2003 and including the 2004 acquisition of Sema.

• Atos Consulting has been selected by the London Borough of Lewisham to research models for local authority collaboration in housing and council tax benefits administration. The study is funded by the Department for Work and Pensions. The value of the contract has not been disclosed.

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4. BT NETS $3bn REUTERS CONTRACT

BT has secured a $3 billion (£1.6 billion) contract to supply network services to information provider Reuters over eight and a half years.

The arrangement includes the transfer of a handful of Reuters IT employees to BT as well as over 800 employees of Radianz, a financial services extranet provider that BT is acquiring from Reuters for $175 million.

Under the agreement, BT will provide and manage secure data networks for Reuters products and services worldwide.

Reuters group chief executive Tom Glocer commented: "The network services agreement with BT signals the start of an important relationship. It will see Reuters and its customers benefit from the range of communication services that BT and Radianz will provide to the financial services community. Along with the sale of Radianz, it also sees Reuters exiting the provision and management of data networks - a major contributor to our Fast Forward business transformation programme."

BT said the purchase of Radianz is a step in its transformation into a global provider of networked IT services. Ben Verwaayen, BT chief executive, added: "The acquisition is of strategic importance as the global financial services market offers a huge opportunity for BT and this will form the cornerstone of our approach to the sector."

5. RENAULT DRIVES THREE-WAY OUTSOURCING DEAL

Renault has selected Atos Origin, CSC and HP for three contracts comprising a major outsourcing deal valued at a total of 625 million (£436 million).

Atos Origin takes the lion's share of the work, being named as Renault's worldwide applications management partner. Under a 300 million, five-year contract, Atos Origin will maintain more than 2,000 applications, upgrade legacy software and build new applications.

CSC has been selected for a 175 million, five-year IT infrastructure services contract with the car manufacturer. This is CSC's first major contract win in France and covers the provision of infrastructure management services, including network, mid-range and mainframe support for Renault sites in France and Spain.

Bringing up the rear is HP with a 150 million, five-year deal to provide desktop services to Renault's 87,000 users in 26 countries. Again this is a landmark contract for HP as it seeks to build a global services business.

While large continental European companies have been slow to outsource, deals such as this suggest France - and likewise Germany - may begin to catch up with the UK as they seek the benefits of outsourcing within globalisation strategies.

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