British Telecommunications Plc is set to announce the formation of an IT services arm with potential annual revenues in excess of $2bn through merging its Syncordia Solutions division and Syntegra systems integration house. The new BT Solutions division will operate as a full-scope IT services operation it covering all the bases from consulting, systems integration and managed network services. Full details of the new division are to be released in July.
The move caps a two-year period of consolidation at BT which now hopes to build on its separate services revenue streams. Syncordia Solutions returned revenue for the year ending March 31, 1999 of $1.297bn, a figure that represented a growth rate of 27%. ‘We intend repeating this performance in the coming year, said Danny Garvey, director of strategy at Syncordia. Its system integration partner, Syntegra meanwhile reported revenue growth of 18% to $668.8m for the year to March 31, 99. Of this around 70% or $464m is derived from UK clients. It has a physical presence in over 50 countries, however, including France, Holland, Germany, Switzerland, the US and Australia and over half of its 4,000 strong workforce are deployed outside the UK.
BT launched the Synchordia managed service arm to meet a supposedly strong demand from its client base for advice and hands-on expertise in WAN technology. Its offerings have diversified lately to encompass intranet, call centres and increasingly VoIP (Voice over Internet Protocol) services and more recently it took the fledgling BT Consulting practice under its wing. Syncordia currently has around 5,500 employees. Over the last financial year 4% of staff moved on, but the total recruitment figure was 13%, resulting in a net staff increase of 9%.
Garvey told us that growth by acquisition is very much on the agenda in the coming year. ‘We will be looking for companies that can enhance our skills base and add to our capabilities in areas such as intranet and LAN technologies, he reported, ‘we will not however, be acquiring to expand our client base.’
BT Solutions will benefit greatly from having BT as its parent company. Undoubtedly Syncordia’s ease of access to major global 2000 clients lies behind its rapid growth. BT also has a wide range of joint venture partners in Europe. These include in France, Cegetel Consumer and Entreprises, in the Netherlands, Telfort and in Sweden, Telenordia (a joint venture with Telenor and Tele Danmark). If BT Solutions can leverage its position then it clearly has the potential to become a major player in the European IT services sector.
Syncordia’s vertical focus is in the retail, banking, leisure and petrochemical sectors. In the leisure sector Garvey reports a growth in demand for Syncordia services of 76%. ‘We are increasingly taking on clients from the European hotel industry that is lagging the US in providing certain facilities. For instance, executives are rarely able to log on to the Internet from the comfort of their hotel room,’ he commented. The retail-banking sector, meanwhile, is Syncordia’s strongest vertical. Garvey reports that Syncordia currently manages the voice and data networks of 18 of the top 20 UK retail-banking institutions. Its contracts in this sector are worth anything between $8m and $152m over a five-year term. Syncordia’s consulting arm is still small with around 70 billable employees at present. There is a considerable spread of interests from outsourcing, business consulting on the impact of the Euro, and Y2K and M&A activity, to customer relationship management and e-commerce.
In voice messaging Syncordia offers design and management services of enterprise-wide mixed networks that includes usage reporting, analysis and diagnosis. Syncordia’s custom line of business provides premises for the housing and management of telecommunications and computing equipment, including design, procurement, network management, and helpdesk. It also offers all sorts of messaging services and claims competencies in areas such as intranets, ISDN, EDI, X.25 and X 400.
