Accenture Ltd, one of the first companies in the sector to report, set the tone by announcing a fall in net profit of some 67% from the previous year, on revenue that grew a healthy 8%. The company’s profits were dragged down by a $450m charge incurred on its two contracts with the UK National Health Service.
Contract losses also hit Accenture’s rivals Affiliated Computer Services Inc, which saw net profit fall 32% to $77.9m, largely due to high start-up costs on two human resources outsourcing deals, and Perot Systems Corp, where profits dropped 13% on charges to an unnamed problem contract.
For the second consecutive quarter, the fastest-growing company tracked by Global Computing Services was Finland’s SysOpen Digia Group Plc. The company, which was formed in February 2005 through the merger of SysOpen Plc and Digia Inc, more than doubled its quarterly revenue to $21.4m from $10.5m in the same period of the previous year, although sales were flat on a sequential basis.
Offshore services vendors once again recorded stellar growth rates, with US-based Cognizant Technology Solutions Corp leading the way with revenue growth of 57%. Cognizant forecast sales of approximately $317m in the three months to June 2006, which would put the Teaneck, New Jersey-based company around the same level as the fourth-largest Indian IT services player, Satyam Computer Services Ltd.
Of the tier-one Indian companies, market leader Tata Consultancy Services had the best quarter, growing net profit to $181.4m from $105m on sales that grew by 44% to $836.5m. TCS’s growth has been complemented by its acquisition strategy, which has seen it snap up Comicrom SA and Financial Network Services Pty Ltd. The company has also won a number of big deals in recent months, most notably an $838m contract with UK-based insurer Pearl Group Ltd.
The unwelcome honor of being the worst performing vendor tracked by Computer Business Review over the three-month period went to Canada’s CGI Group Inc. In its second fiscal quarter, the company suffered a 71% drop in net profit and a 5% fall in sales. The poor performance was largely due to restructuring costs, including a $27.7m charge to cover the cost of 600 job cuts. Some 400 more jobs are expected to go before the end of the year, the result of decline in business from CGI’s largest client, telecoms operator Bell Canada.
