MCN Direct Newswire

Vol. 8 No. 5, 20 April 2009

This issue is sponsored by:

Symantec and NCC

This issue news

1. BearingPoint reaches breaking point
2. TCS scoops child maintenance contract
3. Hitachi Consulting buys Edenbrook
4. Logica scores £75m police contract
5. BT joint venture buys scandal-hit Satyam
6. Further information - feedback/pass on to a colleague/remove from mailing list

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1. BEARINGPOINT REACHES BREAKING POINT

Global consultancy BearingPoint, which has been in financial trouble for some years, has bowed to the inevitable and is slicing up its business and selling off key units to rivals Deloitte and PricewaterhouseCoopers. In Europe, BearingPoint is discussing the sale of its business to local management and other potential buyers.

The company admitted late last year that it did not have enough cash to sustain its business over the long term. On 18 February, it filed for Chapter 11 bankruptcy in the US and on 23 March confirmed plans to sell almost all of its businesses - and transfer over 13,000 employees globally - to a number of parties.

Deloitte has stepped forward to buy a significant portion of BearingPoint's public sector business, which holds a number of US federal government contracts. It will pay $350 million (£240 million) for the operation.

PwC has signed a letter of intent to buy BearingPoint's North American commercial services business for $25 million and has entered a share sale to buy the consultancy's business in Japan for $45 million.

The potential sale of BearingPoint's EMEA and Latin America operations, and its remaining business in Asia-Pacific, is under discussion with local management and other buyers, but the consultancy warns: "There can be no assurance that we can enter into a definitive agreement regarding such sales or that a transaction will be completed."

2. TCS SCOOPS CHILD MAINTENANCE CONTRACT

India's Tata Consultancy Services (TCS) has surprised established UK government suppliers by winning the contract to deliver IT systems for the Child Maintenance and Enforcement Commission's future maintenance scheme.

The value and length of the contract have yet to be detailed, but this is a coup for TCS as it has struggled for some time to enter the UK central government market. Its success is believed to be based on the promise of low-cost, high-quality services delivered from both onshore and offshore.

The agreement follows EDS' disastrous £456 million project at the Child Support Agency (CSA) that failed to collect and pay child maintenance correctly, leaving families short of money. The EDS contract used bespoke software, but TCS will field commercial off-the-shelf software. Its deal is with the Child Maintenance and Enforcement Commission, which was set up in November 2008 to run a statutory child maintenance scheme from 2011 and replaces two schemes provided by the CSA.

As well as Whitehall work, TCS is chasing local government deals and is in a good position, as a subcontractor to T-Systems, to secure upcoming council contracts in Cardiff and Essex.

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3. HITACHI CONSULTING BUYS EDENBROOK

Hitachi Consulting has acquired UK-based IT consulting firm Edenbrook, a specialist in Oracle and Microsoft solutions that will boost Hitachi's UK consultancy employee base to over 300 and its India-based offshore delivery team to over 50 people.

Founded in 2001, Edenbrook supplies business efficiency solutions to clients including Virgin Media, EasyJet, Lloyds TSB and Whitbread.

Hitachi Consulting began operations in Europe in March 2006 with offices in London, Madrid and Lisbon. In 2007, it opened offices in Frankfurt and Barcelona, and acquired London-based management consulting firm Impact Plus.

David Bailey, Hitachi Consulting UK managing vice president, commented: "We are excited about the addition of great consultants, clients and capabilities in the UK to better service our joint clients and the market."

Edenbrook managing director David Kilpatrick added: "Joining with Hitachi Consulting is an important milestone in the development of our business, allowing us to offer greater breadth and depth of capability to both our existing clients and the wider marketplace."

Following the acquisition, Kilpatrick will become managing vice president of Hitachi Consulting in the UK while Bailey will move on to take an international development role.

4. LOGICA SCORES £75m POLICE CONTRACT

Logica has secured a £75.6 million contract with the National Policing Improvement Agency (NPIA) to set up and run a national database that will enable police to share information across forces for the first time.

The initial phase of the seven-year Police National Database programme will be rolled out in 2010 and will integrate data from five operational policing areas - custody, crime, intelligence, child abuse and domestic abuse - into one central system.

This will give forces immediate access to up-to-date information from across the service and support the first-phase aim of safeguarding children and vulnerable adults, countering terrorism and assisting major crime investigations.

Chief constable Peter Neyroud, chief executive of the NPIA, said: "This is a significant milestone for the NPIA, for policing and ultimately for the public. Currently police forces are unable to search or access intelligence or other information that is held on other forces' local systems. The Police National Database will enable this by making available nationally copies of locally held information on suspects and criminals."

Logica will work with Northgate Information Systems and SunGard Public Sector on the applications development and business change aspects of the project, while Cable & Wireless will provide hosting and communication services.

5. BT JOINT VENTURE BUYS SCANDAL-HIT SATYAM

Tech Mahindra, a joint venture owned by BT and Indian conglomerate Mahindra & Mahindra, has won the bidding to acquire disgraced Indian IT services company Satyam Computer Services.

Tech Mahindra beat private equity firm WL Ross & Co and Indian engineering construction group Larsen & Toubro to buy Satyam, which fell foul of the law late last year when former chairman Ramalinga Raju admitted fraudulently amending the company's financial accounts.

Tech Mahindra is paying $351 million (£241 million) for a 31% share of Satyam and will follow this with an open offer for a further 20% of the shares at the same price. This values the company at about $1 billion, just over half its reported revenue for the year ended March 2008.

There can be no certainty that Tech Mahindra is paying a fair price, as Satyam's true financial position has still to be clarified. The share price offered by Tech Mahindra was 58 Indian rupees, well above the other bidders' offers of 20 and 45.90 rupees.

If Tech Mahindra has paid a realistic amount for Satyam and can overcome problems such as lost customer loyalty, it could develop a tier-one Indian services company based on its own 2008 revenue of $750 million and anticipated revenue from Satyam of about $1.3 billion in fiscal 2009.

Currently, Tech Mahindra makes about 60% of its revenue from services to BT including application management and maintenance.

6. FURTHER INFORMATION - FEEDBACK/PASS ON TO A COLLEAGUE/REMOVE

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Written by Sarah Underwood. Copyright 2010 The National Computing Centre Ltd.

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