By Tony Cripps
ICL Plc is investing 100m pounds ($162m) to expand its e-business services, even though this might compromise its planned initial public offering. Esa Tihila, Director of Global eBusiness Services for the UK-based IT services vendor, said that the necessity to grow the revenue of its eBusiness unit outweighed the likely effect on ICL’s profits. ICL, a perpetually under-performing company, has previously stated that it needs to impress investors before it returns to public ownership sometime post-March 2000.
As part of the initiative, ICL intends to create 4,400 new jobs in the next three years. 2,700 of these will be in continental Europe, 1,000 in the UK and a further 700 in the US. The company will also retrain 4,000 staff from across its other operations to further boost its eBusiness headcount. The decision is a brave one for ICL whose operating margins ran to only 3% in the financial year to March 31, 1999, with the company making a net loss of 153m pounds ($248m). ICL is also heavily involved in training some 4,000 staff in Microsoft technologies as part of its increasingly close relationship with the Redmond-based company.
In a move designed to cushion the impact of the expenditure, funding for the expansion will come from profits generated within the eBusiness unit itself, according to Tihila. ICL’s e-business revenues are expected to double this financial year to around 160m pounds ($260m), 5% of the company’s total revenue. Tihila expects ICL’s e-business to continue growing at around 100% at least for the next three years, eventually making up half the group’s sales.
ICL will now establish seven dedicated e-business centers at ICL facilities in Finland, Germany, Ireland, the USA, Denmark and two in the UK, with operations governed from the Finnish center in Helsinki.
Among a number of related announcements, ICL said it has forged an agreement with Nokia to develop wireless application protocol applications around the Finland-based telecoms equipment manufacturers recently announced WAP servers. The announcement follows a similar one by fellow IT Service provider, Netherlands-based Getronics last week.
ICL is also trumping up its e-procurement capabilities with the announcement that it is developing a pan-European business-to-business trading community in Dublin, aided by investment from the Irish Government.
New contracts disclosed include WAP-based banking services for Finland’s Leonia Bank and a deal to design, build and operate a 51,000 user intranet for European retailer Kingfisher.
