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Blog posts by Rachael Stormonth

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  • Infosys: 100 Days In

    Nov 18, 2014, by Rachael Stormonth

    In September we wrote an event note following Infosys European analyst meet on the principal message in the keynote address by new CEO Dr. Sikka “Renew the core business, innovate into new businesses” (see here). Earlier this month we attended Infosys’ U.S. analyst event and its Confluence customer meet in Orlando. Dr. Sikka was about 100 days into his role, and we were lookin[...]

  • HP BPO: Reenergized in Europe, Increasingly Bullish

    Nov 16, 2014, by Rachael Stormonth

    NelsonHall recently attended an HP Enterprise Services (HP ES) analyst and adviser event in London focused on its European BPO business - on what was the first working day of its FY 2015. The tone was very upbeat: FY 2014 was a good year, with HP ES winning 11 out of the 12 BPO deals for which it bid, for an overall TCV of $1bn+ And management described its pipeline for FY 15 as “[...]

  • Unisys Q3 Results: Departing CEO Leaves on a High

    Oct 27, 2014, by Rachael Stormonth

    This is the last set of quarterly results Unisys under the leadership of Ed Coleman – and it has been a last hurrah: Revenues were $883, up 11% y/y, up 10% in constant currency: the strongest quarter of growth for many years at Unisys Operating income was $77m, an operating margin of 8.7%, up 570 bps from a margin of 3.0% in Q3 2013. Significantly, the topline gro[...]

  • Xerox Services: Q3 Disappoints, but Investing for Future Profitable Growth

    Oct 27, 2014, by Rachael Stormonth

    Xerox Services Q3 Results: Any Signs of Progress? Xerox Services, now 57% of total Xerox Group revenues, is critical to the future of Xerox: it is its engine for future growth.We have been waiting for a better quarter for some time, but Q3 was not a stellar quarter for Xerox Services. Revenues Flat and Signings Down, with ITO the weakest link Xerox Services revenues in 2014 YTD are flat &[...]

  • September Quarter Results from Five Indian Providers: Generally Positive, but Indian Street Expects More

    Oct 20, 2014, by Rachael Stormonth

    Last week we looked at Infosys' quarterly results. It has been another busy week of quarterly reports from some of the Indian oriented service providers. How did five of them do? Syntel (Q3 CY14): Softness in Healthcare Greater than Expected Revenue was $228.3m, up 8.8% y/y, but slightly below consensus Operating margin was 29.8%, down 610 bps y/y, with less benefit from rupee depre[...]

  • Accenture: Reinventing the Interface Between Business and Technology

    Oct 16, 2014, by Rachael Stormonth

    Accenture’s recent analyst event in New York was essentially a platform for it to showcase capabilities which it believes are key differentiators, both in terms of its attributes and also highlighting some areas of its portfolio which position it well for current and future profitable growth. The tone throughout was bullish re current and future performance - and recent performance supp[...]

  • Outlook for Infosys: Still "a Marathon not a Sprint"?

    Oct 13, 2014, by Rachael Stormonth

    Infosys reported Q2 FY15 results today and new CEO Vishal Sikka took the occasion to share his strategic vision for the company. Sikka is quite an orator, for example declaring his aspiration for Infosys to once again be a bellwether of the IT services sector, and to achieving above average topline growth and margin. Anyone who was looking to learn something more about Sikka’s l[...]

  • The HP Break Up: Will it Help Hewlett Packard Enterprise Gain Momentum?

    Oct 06, 2014, by Rachael Stormonth

    Following reports in the WSJ and other media on Sunday, HP confirmed very early this morning that it intends to separate into two public companies: HP Inc: the personal systems and printing businesses; will have Dion Wessler as CEO, Meg Whitman as Chair HP Enterprise: servers, storage, networking, converged systems, services and software businesses, will continue to have Whitman as CEO, wi[...]

  • Infosys Event Note: “Renew the core business, innovate into new businesses”

    Sep 25, 2014, by Rachael Stormonth

    NelsonHall recently attended Infosys’ European analyst and adviser summit held in advance of its “Confluence” customer event. Dr. Vishal Sikka has been in place as CEO for less than two months. During this time he has met with several dozen key clients, held senior exec meetings in Stanford University (his alma mater), visited nearshore delivery centers, including a BPO site i[...]

  • The "New Concentrix": a Different Type of Player in CMS BPO?

    Sep 12, 2014, by Rachael Stormonth

    Concentrix recently briefed NelsonHall about its positioning now that it has essentially completed its acquisition of the former IBM BPO capabilities around customer management services and also some industry-specific services (excluding mortgages, which IBM retained). For details of this acquisition, see "IBM Exits CMS and Most Industry-Specific BPO: Divests Business to Synnex Corp" at:[...]

  • When The Going Gets Tough, The Tough Spend On S&M

    Aug 28, 2014, by Rachael Stormonth

    When you look at the financial performance of the four largest Indian oriented IT service providers (IOSPs) over the last four years, it becomes evident that there is a direct correlation between the level of topline growth they achieve and their expenditure on sales and marketing (S&M)…with EBIT margins benefiting from the strong topline growth. Let’s look at a few data points[...]

  • Xerox's Loss is Accenture's Gain in Texas Medicaid

    Aug 22, 2014, by Rachael Stormonth

    In a case that has been unfolding for several years now, and which heated up in early May, Accenture on August 1 assumed responsibility for administering Medicaid claims in the state of Texas. Accenture’s first award as a state’s primary fiscal agent was announced in the wake of a dispute between Texas and  Xerox over its process for reviewing Medicaid dental c[...]

  • Cognizant Q2 2014 Results: Delivers on Revenues, Margins, But Share Price Falls on Reduced Guidance. Over-Reaction, We Feel

    Aug 06, 2014, by Rachael Stormonth

    So why has Cognizant’s share price taken such a battering today, after such strong topline growth (16.5%, at the mid-point of prior guidance) and a non-GAAP operating margin of 21%, above the company’s target range of 19% to 20%? (see here). Quite simply because of the revised revenue guidance for 2014 from growth of at least 16.5% to at least 14%. This is a huge[...]

  • HCL Q4 FY 2014 Results: IT Infrastructure Services, Europe Dominate Growth; Application Services Relatively Soft

    Aug 05, 2014, by Rachael Stormonth

    At first glance, its Q4 FY 2014 results look like another impressive quarter’s performance from HCL Technologies (HCL), with the strongest y/y topline growth since Q2 FY 12 (to 14/6%) and ongoing y/y margin improvement (to 24.1%). (See here for full details). Look more closely, however, and, while the performance is undoubtedly very strong, it tends to be concentrated in a few service lines [...]

  • European IT Services Majors Deliver on Margin Improvements in H1; H2 Margins Will Be Impacted by Consolidation

    Aug 05, 2014, by Rachael Stormonth

    The H1 results from the European majors Atos, Capgemini, Sopra, all France-headquartered, are now in - also those of Sopra, about to merge with Steria. So what does this tell us, about the progress of these firms and the state of the European market and what should we expect in H2 2014? The average constant currency revenue growth experienced by these firms in H1 2014 was 1.4% with Steria and S[...]

  • Xerox Services Q2 Results: Further Problems in Government Healthcare Business, but Beginning to Grapple With Margins

    Jul 25, 2014, by Rachael Stormonth

    Xerox Services has had a challenging half year: In Q1 it announced it was taking an impairment charge ($80m for the year) related to HIX platform impairment (see here for discussion). In Q2 it lost the Texas Medicaid contract. The impact of this is significant (around 1.5% of revenues): Q2 2014 Services contract renewal rate was 63%, well below the company’s target range of 85% to 90[...]

  • Wipro Q1 FY 2015 Results: Good in Parts....

    Jul 24, 2014, by Rachael Stormonth

    Wipro announced its Q1 FY 2015 results today (for full details see here:). Bit of a mixed bag from Wipro this quarter, generally positive, but with a few areas where we would hope to see improve over the next few quarters. Looking at overall topline performance, revenues were towards the higher end of prior guidance of $1,715m-$1,755m, and the 9.6% reported y/y growth was[...]

  • TCS: "Big, Broad, and Bold"

    Jul 18, 2014, by Rachael Stormonth

    In case anyone has missed the phenomenon that is TCS, it has achieved over 16% y/y growth in four of the last five quarters (with “just” 15.3% in the fifth). This quarter, it reported a y/y increase of nearly $530m in revenue. If TCS continues at this pace – and management commentary is of a strong pipeline – then revenues this fiscal year should be around $15.5bn. TCS has [...]

  • Infosys' Last Quarterly Results Before Arrival of New CEO: Any Surprises?

    Jul 11, 2014, by Rachael Stormonth

    What do Infosys’ Q1 FY 2015 results indicate about its current performance and its general health as a new CEO arrives? (a full breakdown of the results are available here) Revenue growth of 7.1% was in the 7% to 9% guided range for the full year, albeit at the low end. This was the third quarter in a row of decelerating growth, in both reported and constant currency gro[...]

  • Serco: More Bad News, But Beginning to Grasp the Nettles

    Jul 08, 2014, by Rachael Stormonth

    Last week Serco Group provided an update on its H1 2014, at the start of its close period before the results on August 12, 2014. Overall performance is in line with the guidance for H1 2014 given in the market update two months ago, of Adjusted revenue of ~£2.4bn, broadly flat y/y on an organic basis A significant y/y decline in margins, with an improvement expected in H2. [...]

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