Tuesday, 2 September 2008

New appointment at BT Global Services

Sorry but I missed the announcement in mid-August of the appointment of Tim Smart's replacement at BT Global Services UK. If you remember Smart was appointed as CEO at University College Hospital - quite a brave move! See Smart move. Royston Hoggarth is the new CEO of BT Global Services UK. As such it is a bigger job than Smart held as it includes both public and private sector activities in the UK.

In 2003 and 2004, Hoggarth was CEO of Cable & Wireless UK, Europe and U.S. From 2001 through 2003, he was CEO of Logica's International business after serving as supervisory managing director for Logica Mobile Networks. Hoggarth is currently managing director of Strategic Capital Associates (SCA) Limited, a corporate finance advisory business.

UK customers contributed around half of BT Global Services’ global revenues in 2007/8 – around £4.5b out of almost £8b earned worldwide. However most of this would not be classed as IT services revenues by our definition as it is recharged telcom services revenues as part of managed services contracts. However BT Global Services c£1.3b UK SITS revenues still ranks them around 6th in the UK tables on the Ovum rankings. Either way, this is a BIG job and of key importance to the success of BT and its struggle to find both organic growth to replace its declining line revenues and increase margins at BT Global Services to meet the 15% goal set several years ago. BT Global Services has been tardy in rising to the offshoring opportunity and now has some catching up to do to make its cost base competitive.

I think it also needs to finally decide what type of 'IT services' company it wants to be. Does it want to be an EDS/IBM Global Services/CSC/Accenture/Capgemini/Fujitsu-type 'full service' competitor? Or is it a network management operation? Even now its UK operations have a quite different profile to its international operations. I have long believed that if it wants to be a conventional IT services player it should go on the acquisition trail - even buying one of the Big Players in what would effectively be a reverse takeover in the Global Services part of the business. But BT's share price has declined steeply in the last year and I would guess that big plays of that type would get short shift from main board directors and shareholder alike.

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