IT industry analysis—2009 Week 31—on one page
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Catch up on the past week's analysis
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INDIA
- Tech Mahindra has announced revenue growth of 2% at constant currency to $0.23bn for calendar 2Q09. Tech Mahindra is now dependent on BT for 52% of its revenues, down from 63% a year ago. The firm also admitted it has "not yet found the bottom", in its investigation of Satyam's true financials, or in terms of client attrition. Tech Mahindra is using BT to help it revive Satyam: BT is meeting Satyam's clients and improving its cooperation with multinational software groups. [1]
- Infosys declared a 3% sequential drop in revenues to $1.1bn. Its utilisation rate, currently at 70%, continues to fall, and a very high proportion (62%) of revenues come from time & materials contracts. BT is both Tech Mahindra's and Infosys's largest client, and the telco now accounts for 4.5% of Infosys's revenues, down from 7.9%. Analysts wonder why Infosys has not cracked the largest public sector in the world (by headcount), namely its home country, India. Its failure to acquire Axon last year points to its innate conservatism, but has left it with a war-chest of over $2bn.
- Wipro says it is seeing an increase in demand for shared services for software application management, in which implementation resources are shared across multiple clients. Wipro claims this reduces the cost of application management by 20-25%. Wipro currently has 300 people working for this business, known as FlexDelivery, which is currently available for only one package. [2]
- Wipro has reported IT services revenues up 2% (in constant currency) to $1.0bn for calendar 2Q09.
- Nasscom, India's software industry body, says that India’s software and services sector is likely to experience single-digit growth in 2009-10, a new low for the $60bn industry that grew 16% last year despite the global economic downturn. High domestic demand is not enough to offset the fall in exports. Driving the decline is lower global spending on BPO and the shortage of mega-deals in the USA and Europe. [3]
SERVICES
- Atos Origin posted first half revenues of €2.6bn, down 10%. The UK was up 6% to €0.45bn. NelsonHall forecast that its occupational health business in the UK is likely to grow this year. [4]
- BT Global Services posted revenue growth of 4% to £2.1bn for calendar 2Q09. The division made a loss of £0.12bn, despite a large number of senior managers being axed. [5]
- Capgemini announced 1H06 revenues of €4.4bn, down 2.2% on a like-for-like basis. Consulting and technology services saw the biggest sales drops, down 13% and 3% respectively. UK and Ireland was down 2% to €0.97bn. Its strength in the public sector—e.g. through the Aspire contract at the HMRC—means that Capgemini is less exposed to the recession. [6] [7]
- Capita has announced organic growth of 8% to £1.3bn for 1H09. Its medium-term future is very secure: it has a bid pipeline of £3bn, and none of its contracts is due for renewal before 2012. [8]
- Getronics announced external revenues down 2% to €0.50bn in 2Q09. Revenues from Holland were up 3% despite difficult market conditions. Getronics has completed most of its headcount reduction of 1,400 full-time equivalents. Its Dutch parent, said it is assessing the future of the Getronics business in the UK. Having already sold its Spanish and Australian businesses, Getronics managing director said: "The UK market remains our most exposed part of the international business." However Getronics UK itself reaffirmed its commitment to the UK— its customers include Barclays, Deutsche Bank and Dell, it has 2,000 employees and annual turnover of around €250m. [9]
658 subscribers BACK ISSUES: | |
| PCs + Services | |
| CapEx→OpEx | |
| Net & Services | |
| Realigning | |
| Decline | |
| Consolidation | |
| Transactions | |
| Cost-cutting | |
| compiled by: |  Gavin Wilson |
- Unisys declared worldwide revenues of $1.1bn, down 16% on a year ago. EMEA was down 28% to $0.34bn. Unisys's management focussed on cost-cutting on its call, leaving analysts with little idea how it would increase revenues once the market recovers. [10]
e-BUSINESS
- Amazon’s online sales grew more than 14% in the quarter to $4.7bn, but analysts were worried that Amazon refused to break out the revenues of its cloud business, Elastic Computing Cloud (EC2). EC2 is aimed at the lower end of the market, but so far the majority of SMEs prefer terra firma—i.e. in-house operations—for their IT.
- Shares in Yahoo! slumped 12% after the company agreed to outsource its search business to Microsoft. Previously its CEO, Carol Bartz, had said she would only sell Yahoo’s search unit for “boatloads” of money. Now she has struck an agreement that didn’t include any up-front payment. Yahoo will use Microsoft's Bing search engine rather than its own, and it will keep 88% of the revenue from ads on its own sites for the first five years of the 10-year partnership. Microsoft CEO Steve Ballmer said that, in Internet search, "scale drives knowledge" which, in turn, fuels innovation. He said there is a particularly powerful feedback loop in search advertising. The Microsoft-Yahoo partnership will now have nearly 30% of the search market. In Microsoft’s thinking, that figure has been significant, as it gets the company into the top three of any market. But by handing over a large portion of its business to Microsoft, Yahoo! risks seeing much of its infrastructure disappear, and losing key employees and properties. [11][12] [13]
SOFTWARE
- IBM is to acquire, for $1.2bn in cash, SPSS, the developer of predictive analytics software. Founded 41 years ago, Chicago-based SPSS originally created basic statistics-crunching software that was widely-used by students. Evolving into a cutting-edge data-mining vendor, SPSS coined the phrase 'predictive analytics'. Where BI software answers the historical questions of what happened and why, predictive analytics is focused on taking that information to predict future trends. (A key driver of demand for predictive analytics is the global recession. Companies need to reduce risks and drive business.) Buying SPSS, which had 14% of the predictive analytics/data mining market segment, will enable IBM to leap from 13th to 2nd place, behind only SAS, which dominates the segment with a 33% market share. IDC believes some segments of this market are growing by more than 25%. IBM already has a reseller and OEM relationship with SPSS, so the real test is what IBM will do with the SPSS technology. SAP said that the partnership between SAP and SPSS has been good, and the firm doesn't expect that to change under IBM's ownership. SAP will continue to partner with IBM, it said. [14] [15] [16] [17] [18]
- SAP announced 2Q09 revenues of €2.6bn, down 10% on a year ago. SAP now predicts that its software-related revenues are likely to fall by up to 6% this year. [19]
- Sage announced a revenue increase of 17% to £0.8bn for the six months to 31st March. Sage's CEO said that its proven business model and large, geographically diverse, customer base gave the company confidence that it is well-positioned for the current economic difficulties and the eventual market recovery. [20]
HARDWARE
- Having been overtaken by both Dell and Acer in the UK PC market, HP's interim head of the UK Personal Systems Group says HP will not use price reductions to regain the No. 1 spot in the UK PC market. [21]
- Ingram Micro, the world’s largest IT distributor, has admitted its sales are declining faster in the UK and EMEA than its competitors' but has vowed to reverse that trend. Ingram saw EMEA sales fall 32% in calendar 2Q09. [22]
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