MCN Direct Newswire

Vol. 5 No. 30, 23 October 2006

This issue is sponsored by:

Maconomy, PH Media and Management Consultants' News

This issue news

1. Accenture's bête noire goes up for sale
2. IBM reports slow services growth
3. Capgemini develops child protection scheme
4. India's TCS and Wipro keep pace with Infosys
5. CSC extends pact with Whitbread
6. Further information - feedback/pass on to a colleague/remove from mailing list

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1. ACCENTURE'S BÊTE NOIRE GOES UP FOR SALE

iSoft, the software vendor implicated in Accenture's recent pull-out from the £6.2 billion NHS IT upgrade, is in talks with potential bidders after putting itself up for sale.

Speaking at the company's AGM last week, iSoft chairman John Weston said expressions of interest had come from both financial investors and companies with strategic interests in the healthcare market.

He explained: "The board has concluded that shareholders' interests are best served by opening discussions with a number of these parties with the objective of clarifying the options and determining the most appropriate route forward for the company and its shareholders. These discussions may or may not lead to an offer for the company."

iSoft is a key software provider to the NHS' Connecting for Health IT programme, but suffered a financial collapse earlier this year and was seen as one of the culprits in Accenture's decision to pull out of the programme (MCND 5-27).

Accenture was working with iSoft on two regional contracts, but was frustrated by delays in the development of iSoft's software. These contracts have now been passed to CSC, an existing supplier to the NHS project that is working with iSoft under a strict development agreement.

Commenting on the NHS announcement that CSC was taking over Accenture's contracts, Weston said: "The statement also ended speculation that iSoft might be subject to litigation from Accenture. That statement reflects a welcome and significant step forward in resolving uncertainties surrounding iSoft's trading position."

As discussions open on a potential sale of the company, iSoft's financials are showing little sign of improvement. It expects a revenue decline of 10-15% for the year to 30 April 2007 as a result of delays to the rescheduling of deliveries under the Connecting for Health project and the impact of negative media and market comment.

2. IBM REPORTS SLOW SERVICES GROWTH

IBM's global services revenue growth is lagging behind its other business areas. The company's third-quarter services revenue rose 3% on last year's comparable quarter to $12 billion (£6.4 billion) - behind software up 9% to $4.4 billion and hardware up 9% to $5.6 billion.

In total, IBM's net profit from continuing operations grew 9% compared to the same period a year ago. Its revenue rose 5% to a total of $22.6 billion.

Despite the slow growth, global services continues to represent more than half of IBM's revenue. In the third quarter, the services business signed contracts totalling $10.5 billion, ending the period with a backlog estimated at $109 billion.

Commenting on the financial results, IBM CEO Sam Palmisano said: "Our strong performance is the result of excellent execution and the repositioning of IBM's business model to capture the growth and profit areas of a rapidly changing IT industry."

From a geographical perspective, revenues from the EMEA region climbed 6% year-on-year to $7.3 billion, with the Americas up 3% to $9.8 billion and Asia-Pacific up 4% to $4.5 billion.

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3. CAPGEMINI DEVELOPS CHILD PROTECTION SCHEME

Capgemini has been chosen by the Department for Education & Skills (DfES) to design an IT solution that will support an Information Sharing Index to be used by local authority staff working to protect children.

The index will enable people working with children to identify and contact each other easily and quickly, so they can share information about children who need services or whose welfare they are worried about.

The Capgemini solution is due to be ready by the end of December, with the DfES planning to implement the index in all English local authorities by the end of 2008.

John Cummings, vice president for the education sector at Capgemini, said: "This crucial project gives us the chance to work alongside the department to deliver something of real value to practitioners as they strive to achieve better outcomes for children in this country."

The contract was awarded under a partnering agreement between the DfES and Capgemini made in 2002. Since then, Capgemini has completed several projects under the agreement and has been audited three times, each time proving delivery of value for money at the department.

4. INDIA'S TCS AND WIPRO KEEP PACE WITH INFOSYS

Tata Consultancy Services (TCS) and Wipro have turned in second-quarter results matching the 40%-plus revenue growth rate set last week by India's second-largest IT services firm Wipro (MCND 5-29).

TCS, which is India's largest IT services player, reported net profit up 44% on last year's comparable period to $216 million (£116 million), on revenue up 42% at $975 million.

Infosys reported net profit up 44% to $199 million, on revenue up 42% to $746 million.

TCS CEO S Ramadorai said: "We had a dynamic quarter with a continuous focus on profitable growth, driven by strong international demand, an increasing number of large customers as well as a healthy addition of 58 new accounts. There is tremendous scope to continue to increase our share of wallet with our top 50 customers using our full-services model."

TCS improved its margins in the quarter to 30 September and hired 9,000 employees for a total of 78,028 at the end of the period.

Wipro closed the quarter ahead of previous guidance and said its robust results were the result of its focus on strategy and execution. It also improved margins, despite wage increases, and added 5,300 employees for a total of 61,200 at the end of the quarter.

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5. CSC EXTENDS PACT WITH WHITBREAD

CSC has signed a $48 million (£26 million) outsourcing contract with hospitality group Whitbread, bringing the value of contracts from the companies' relationship to $222 million since 2000.

The five-and-a-half year agreement supersedes a current deal signed in 2004 and includes the use of CSC's India-based applications support, suggesting that Whitbread sought to renegotiate the deal and push down costs.

According to Ben Wishart, group IT director for Whitbread Group: "Over recent years, Whitbread Group has undergone significant change in terms of acquisitions, divestitures, integration and growth. After a thorough review of our operations, we felt that the previous contractual arrangements were fit for a different Whitbread and that change was required. It is a credit to CSC that it was able to present a more flexible model."

Vanessa Reed, director of CSC's UK retail and leisure group, added: "This new agreement represents a considerable change in operating model and provides flexibility, a different cost structure and a platform for growing the relationship in the future."

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Written by Sarah Underwood. Copyright 2012 PMP (UK) Ltd.