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October 12, 2009

Computacenter builds momentum in managed services

Seen as an outsourcing player by FTSE 250 business

By CBR Staff Writer

Computacenter Plc is taking up its progress as a managed services provider, saying its move into services has paid off as organisations respond to the recession by cutting or freezing capital expenditure and look to outsourcing as a means of reducing operating costs.

At the turn of the year the company made a strategic move to pull out of trade distribution of PCs and printers to focus on big ticket items like servers and storage products, with plans to continue building out its managed services offerings around the infrastructure investments being made by its larger customers.

“Since the start of the year we have seen some revenue decline in some traditional product sales activities, but there has been growth in managed services” MD Simon Walsh told us. 

“There are two reasons. One, we existed the PC ‘smile-and-dial business’ which saw a revenue decline, but a big cost decline as well. Second, the economic environment has prompted many FTSE 250 businesses to look to outsource their IT infrastructure as a means of cutting costs. Nine of every ten contracts will also involve some transfer of IT staffs under TUPE”

Walsh claimed the company had taken on around 20 such managed service contracts since the start of the year saying, “We’ve seen growth of between 8% and 10% in managed service contracts wins, in a market that is growing by only 2% to 5%.” 

The average size of those deals extends from £500,000 to £5 million, depending on the scope of responsibility, and commonly can run for between 5 and 7 years, he told us.

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The company offers a range of services that embrace any element of the hardware and network infrastructure, from data centre management and out to the helpdesk and ITIL-based service delivery.

The vendor will typically compete with the likes of HP, Fujitsu, Unisys and Steria over a full-scope contract, and with a myriad of smaller specialists such as Pheonix, Morse or Atos for more focused infrastructure deals. 

It currently claims 120 customers including the likes of Marks & Spencer and Nationwide Building Society.

These customers are managed by four helpdesks across four geographies manned by 700 staff, around 100 remote management specialists working out of Computacenter’s data centre operations, and supported by 1,500 to 2,000 technicians working out of the field, or dedicated to a customer site. 

“I’d estimate that as much as 60% of the business is now aligned to the job of managed services,” said Walsh.

Group revenues for the six months ended 30 June 2009 were £1.23 billion. The services business grew 8% to £487 million and reportedly contributes over 45% of total profits at the group. Looking ahead in the second half of 2009, the company appears confident that it will see more progress being made in its contractual services.

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