In the three months to June 30, 2003, Espoo, Finland-based Tietoenator reported a 19% decline in after-tax profit to 10.8m euros ($12.1m), on revenue that grew 8% to 341.6m euros ($383m). The company cautioned that Demand for tailor-made projects and repeatable solutions will most likely stay modest during the rest of 2003.

Tietoenator said that demand for outsourcing services remained solid across all its major vertical markets, but it does not expect any major changes in demand during the coming quarter, and added that full-year 2003 revenue growth could drop below 10%.

Tietoenator’s cautious outlook follows a recent survey by the Federation of the Finnish Information Industries, which showed that a total of 39% of the Finnish software and IT services providing companies expect the economic situation in the sector to grow worse in the summer of 2003. Only 13% of the software and IT services providers expect market conditions to improve, and 48% think the situation will remain unchanged. EDB Business Partner, Norway’s largest indigenous outsourcing firm, reported a net loss of NOK 19m ($2.6m) compared to a year-ago loss of NOK 56m ($7.5m), on sales that grew 2% to NOK 1.1bn ($147m). Sales of outsourcing services increased 10% to NOK 713m ($95.6m) but revenue from both software and consultancy declined.

Endre Rangnes, the company’s recently-appointed CEO, said: Turnover reflects a relatively flat market for our services. Earnings are gradually improving as the measures implemented begin to have their full effect. However, profit margins are not satisfactory, and the group is generating too little cash from operations. He said he sees no sign of improvement in IT services spending from the region’s banks – one of EDB’s major vertical markets, in the near future.

Both Tietoenator and EDB Business Partner are coming under growing pressure from larger international rivals which can offer greater economies of scale and longer reference lists. Interestingly, Tietoenator said in its results announcement that large hardware vendors are aggressively trying to increase market share in traditional infrastructure outsourcing. This trend is highlighted by recent wins by Hewlett-Packard in the region with clients including Ericsson AB and the Swedish Agency for Public Management.

Source: Computerwire