CSG sheds 100 staff in contract shake-up

ASX-listed integrator, CSG, will lose 100 staff from its Canberra operations following its failure to secure a number of Government contracts. Group general manager, Brian Lee, said staff cuts had been anticipated when it purchased the Commander business in October last year. He stressed there will be no further losses.

“The tenders lost to other providers had been bidded for by Commander while under receivership,” he said. “We had hoped that those staff would migrate to the new providers with the contracts, but it didn’t occur.”

Lee insisted CSG was in a growth period, having recently taken on an additional 100 staff in its SA operations.

“As it is, we’re keeping on more staff than needed because we feel they are good people and will help us grow the business. We see our main area of growth being in managed services, but are hoping to grow both the enterprise and print services businesses in Canberra,” Lee said.

Commander tenders lost include one to the Civil Aviation Safety Authority (CASA), and most recently, the Department of Agriculture, Fisheries and Forestry.

However, CSG has been awarded preferred tenderer status for a $60 million contract with the Department of Education and Early Childhood Development in Victoria. CFO, Kevin McLaine, claimed a four-year contract to build the Victorian Ultranet is also due to be signed within the next 2-3 weeks.

“I’ve got a timeframe to start on it immediately and it will be fully implemented by the third quarter of the next financial year. Part of the contract is the ongoing maintenance, management and support of it,” he said.

The Victorian Ultranet will be a centrally hosted, Web-based system accessible to Victorian students, parents and teachers based on an Oracle platform. According to the Victorian Department of Education, it will provide attendance records, report cards and other individualised data.

CSG also recently signed a three-year contract worth up to $3 million with the Western Australian Department of the Attorney General and the Department of Corrective Services to provide Strategic Management and IT project services.

Meanwhile, rival ASX-listed managed services provider, ASG, has released positive guidance for its financial year.

In an ASX statement, it announced expected earnings before tax of $19 million, following earnings before tax of $9 million for the December half. It is also expecting double-digit growth in revenue and earnings in the 2010 financial year. ASG CFO, Dean Langenbach, was pleased with its situation and said the company was in a strong cash position.

“We have a strong pipeline in corporate and government,” he said.

“In the 2009 financial year, we experienced good growth on existing contracts. 2010 should see the same kind of growth, and we’ll also be looking for long-term managed services contracts.”

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