MCN Direct Newswire

Vol. 4 No. 15, 23 May 2005

This issue is sponsored by:

TeleWare and InterSystems

This issue news

1. Atos Origin confirms market improvement
2. AT Kearney on the block
3. IBM adds 600 staff in China
4. ALS merges to form global consultancy
5. Cornwell moving in the right direction
6. Further information - feedback/pass on to a colleague/remove from mailing list

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1. ATOS ORIGIN CONFIRMS MARKET IMPROVEMENT

Atos Origin has closed the first quarter of fiscal 2005 with revenue growth across its three service lines of consulting, systems integration and managed operations.

The company said total revenues for the three months to 31 March rose 9% to €1.4 billion (£962.3 million), adding: "This is the third quarter-on-quarter increase, confirming a general improvement in market conditions."

Consulting revenue rose 10% on last year's first quarter to reach €106 million, leading Atos Origin to comment: "The confirmation of growth in consulting demand is an additional indicator of the market recovery."

Systems integration moved up 9% in the quarter to €559 million, the first quarterly revenue growth in more than two years, driven by an increase in volume. Following the sale of the US Cellnet business, managed operations was up 9% at €690 million.

On a regional basis, Atos Origin Germany and central Europe led the way with revenue growth of 92% to €135 million on the strength of a contract with KarstadtQuelle. The UK followed, showing revenue up 8% at €299 million on the strength of additional work, particularly in the public sector.

Elsewhere, The Netherlands pushed revenue up 4% to €257 million, while France gained 2% to €354 million, in part as a result of a recent contract with Renault (MCN Direct 4-5).

In the Americas, where more than 50% of Atos Origin's business was sold off last year, the company returned to growth, showing a 13% gain in the first quarter, while Asia-Pacific recorded growth of 15%.

2. AT KEARNEY ON THE BLOCK

EDS has made an about turn on the future of AT Kearney, saying it will sell the consulting subsidiary after years of denying any such intention.

But Mike Jordan, EDS chairman and CEO, said ATK was not the kind of business that could be sold in the open market because it is driven by key people. Instead, he hopes to spin-off the business to its partners before the end of this year. The price would be several hundred million dollars - Jordan said it would not exceed $700 million (£380 million) - with AT Kearney partners expected to finance a deal to take the company private.

Jordan believes the consultancy would flourish if partners and staff had equity in the firm and ownership of its direction.

EDS acquired ATK in 1995 for about $300 million. After a successful start, it lost ground as large-scale management consultancies such as Accenture and Capgemini developed, and now suffers from being a small captive consultancy in a large IT services multinational.

While EDS has refuted media and analyst speculation that ATK would be sold to help its own turnaround, its view has changed, underlined by a first-quarter loss of $11 million at the consultancy and a 12% drop in revenue to $204 million.

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3. IBM ADDS 600 STAFF IN CHINA

IBM Global Services has opened a third service delivery centre in China which will offer business transformation outsourcing.

The centre in Dalian, north-eastern China, will initially house 600 local workers proficient in Cantonese, English, Japanese, Korean and Mandarin, but has the capacity to grow in line with client demand for business process transformation and technology management.

The centre is IBM's third in China, but the first to provide business transformation outsourcing, a market the company intends to focus on as it attempts to lift profit margins across its Global Services business.

Following a poor first quarter, when IBM reported a drop in the profit margin at Global Services, the company said it would redress the situation by concentrating on high-growth markets, cutting jobs across its European IT services business and sharpening its execution (MCN Direct 4-10, 13).

Included in the services offered from Dalian are transformation and delivery of business processes in functions such as customer relationship management, finance & accounting, HR and procurement. In terms of technology, the centre will provide applications development and management services including project management and business analysis, requirements definition, architecture, design, development, testing, maintenance, deployment and support.

Randy Walker, Asia-Pacific manager for business transformation outsourcing at IBM Business Consulting Services, said: "This is about taking a business process and innovating, transforming and operating it to improve customer satisfaction. The benefits are far greater than just reducing costs."

The Dalian centre adds to IBM's network of over 20 service delivery centres worldwide, though the company recently said it would consolidate these centres into fewer locations.

4. ALS MERGES TO FORM GLOBAL CONSULTANCY

ALS Consulting, the IT and business process outsourcing specialist created in 2002 by three ex-Ernst & Young partners, has merged with Dallas-based Trowbridge Group to form a global shared services and outsourcing consultancy.

Called Alsbridge, the combined company will have over 60 professionals with experience of most business functions and processes including IT, procurement, HR, customer relationship management and finance & accounting.

Tim Lloyd, managing partner of Alsbridge Europe and a founder of ALS, said: "By forming a global company with experience acquired in some of the largest outsourcing deals signed to date in the Americas, Europe and Asia, we are uniquely positioned to help global players take full advantage of the benefits of their insourcing and outsourcing activities."

In the US, managing partner of Alsbridge North America, Ben Trowbridge, added: "As former CEOs and Big 4 managing partners, we truly understand the financial, operational and executive perspective around successful outsourcing and insourcing programmes, as well as hybrid combinations of the two strategies."

While ALS entered the outsourcing advisory market relatively recently (MCN Direct 3-2), its merger with Trowbridge could put it on a par with longer-established outsourcing experts such as TPI and Morgan Chambers.

5. CORNWELL MOVING IN THE RIGHT DIRECTION

Cornwell Management Consultants, the management and IT consultancy that listed on AIM last November, has issued a trading update claiming that it is on course for growth and has matched expectations for the first four months of 2005.

The consultancy, which works predominantly in the public sector, said it received more invitations to tender in the first four months of this year than in last year's comparable period and that it was achieving an improved average win rate. Staff numbers are up from 78 at the end of last year to 85, with utilisation up compared to the corresponding period a year ago.

Cornwell managing director Jonathan Broadhurst said: "All the company's key performance indicators are moving in the right direction. I believe these give us a firm base for the rest of the year."

Last year, Cornwell increased pre-tax profit by 8% to £1.3 million, on revenue rising 28% to £17.7 million.

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Written by Sarah Underwood. Copyright 2010 PMP (UK) Ltd.