Atos Origin, Recovery, Plan

Atos Origin reveals plan to recovery

IT services vendor Atos Origin has set out its strategy for what investment analysts have called a make or break year for the company, following a rough ride in 2006.

Bernard Bourigeaud, chief executive at the Paris, France-based company, which ranks as the 12th largest services supplier worldwide, talked up the companys plans to expand its global sourcing capabilities and to tighten up its management and cost structures.

The company was rattled last year by contract losses and delays in the UK, and tough market conditions in Italy.

Bourigeaud highlighted the main areas of concern: a 12.6% decline in UK revenue from four major contract ramp-downs (including the Metropolitan Police where it lost out to Capgemini); a utilization rate of just 51% in its UK consulting business; and its struggling Italian operation falling into the red.

New CEOs have been appointed for both the UK and Italy to oversee cost cutting programs, with 10% of the Italian workforce expected to be axed.

Atos Origin has identified three main objectives for the next three years as part of what it calls its 3O3 Plan: to accelerate its organic growth capabilities; to improve operational efficiency; and to operate as a global company. The plan, which is set to cost 270m euros ($349m), is aimed at doubling the companys operating profit margin by 2009, building on a recovery in 2007, while sales are expected to increase 8.5% this year.

Global sourcing is at the forefront of the companys strategy for the next three years, with plans to have 5,200 employees based in offshore locations such as India, Brazil and Malaysia by 2009, and a further 900 providing services from near-shore centers such as Morocco and Poland. It expects to achieve these targets without acquisition, and although it is being less aggressive in terms of offshore expansion than the likes of Accenture and IBM, Atos Origin pointed out that there is very low demand for offshore delivery from its core territories such as France and Spain.

The company did come out of 2006 with some positives. It booked 6.8bn euros ($8.8bn) worth of contracts last year including major deals with NHS Scotland and the Department of Constitutional Affairs, it boosted its presence in the European card processing sector with the combined 300m-euro ($388m) acquisitions of Banksys and BCC, and its French and Dutch divisions performed well.