Thursday, 5 February 2009

Atos UK grows 6% in final quarter

(By Anthony Miller). Atos Origin’s 6% organic Q408 UK growth beat that in the Netherlands (-3%) and Germany (just above flat) though France (+7%), Asia/Pacific (+9%) and Americas (+12%) put on a better show. Over the year, Atos UK grew 9% organic, putting it only second to Asia/Pacific (+29%). Netherlands revenues shrunk nearly 2%, with France up 7% and Germany up 6%. UK CEO Keith Wilman has managed to turn around Consulting growth in Q4 though this was not enough to give a positive FY result. UK Systems Integration revenues grew 5% yoy in the quarter, about half the Q3 rate, which pulled FY SI growth down to a still creditable 9%. Managed Operations (outsourcing) grew double-digits over the year and comprises over 60% of UK revenues. We’ll be speaking with Keith Wilman shortly and I will add some colour and movement afterwards.


We’ve just spoken to Keith Wilman, who advised that the UK business actually grew almost 10% last year, to just over £750m. Public sector (60% UK revenues) grew 7%, but private sector doubled that, growing 14%. As we would expect, project services (especially time-and-materials) work is tough to find. That puts Atos’ consulting business a bit on the back foot, particularly as its brand is not as strong as the traditional consultancies. However, Wilman is trying to focus consulting into specialised niches, such as supply chain and ‘lean’, with, it must be said, some success.

It’s therefore mainly the long-term recurring outsourcing revenues that will help tide Atos UK through. Not the least of these is Atos’ NHS contract for Choose & Book. We’ve all given the NPfIT a good (and deserved!) bashing over delays in the electronic medical records roll out, but Choose & Book seems to be doing the job; over 50% of NHS referrals for initial hospital and clinical appointments go through the system.

Wilman is also gradually moving the business more into front-office territory (e.g. their Atos Worldline contract with Whitbred to run the Premier Inn Business Card), on the basis that “when you are part of revenue generation, customers come to visit you!”. Can’t argue with that!

One area, though, I have long had concerns about is Atos’ relatively low proportion of offshore resources – about 6% of group headcount. In the UK, Atos runs its helpdesk from Malaysia, and uses India for SAP work. Given its high public sector exposure, we can sort of understand this, but I can’t help feeling that in the UK systems integration market especially, Atos could be more competitive with greater offshore capability.

Nonetheless, it’s a pretty good show.

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