The UK subsidiaries of EDS and IBM Global Services both topped the one billion pounds revenue mark last year ($1.6bn) and produced the best performances of both company’s international operations. This is the conclusion of the 1999 edition of the Holway report, which examines the performance of the UK software and computing services industry.
IBM’s 38% growth outstripped that of the 27% recorded by EDS and IBM’s revenue of 1.1bn pounds ($1.7bn) is not far behind the 1.27bn pounds ($2bn) reported by EDS. With revenues expected to grow by 30% this year, the report predicts that IBM could well rival EDS for the number one position in the UK, which it holds worldwide.
However, the report picks out Cap Gemini as the star performer with a 54% growth rate that lifted revenue to 596m pounds ($959.5m), putting it into fourth place close behind ICL whose revenue rose a modest 21% to reach 750m pounds ($1.2bn).
The Holway report points out that not all the players experienced strong growth. Services growth at Compaq/Digital was lackluster with revenue rising by just 15% to 310m ($499m). The report says that in the wake of CEO Eckhard Pfeiffer’s departure, many analysts cited Compaq’s inability to capitalize on services operations. Maybe the only answer now is to spin out Compaq’s services, says the report.
The report argues: Perhaps one of the continuing lessons of this year’s top ten is the product/services divide. The fastest growth has come from the conventional services providers. Indeed even at IBM it wasn’t until they acquired Data Sciences that IBM really got their services act together in the UK. Perhaps, the report concludes, ICL and Syntegra, BT’s system integration arm, should have followed that path too.
