CSC profits up, revenues fall

CSC profits up, revenues fall

Computer Sciences Corporation (CSC) has announced profits of $36 million in Australia for the year ending June 30. The figure represents a rise of 63.6 per cent on the previous 12 months.

“It’s very rewarding that the work we have been doing for the past two years is starting to pay dividends,” CSC Australia chief executive, Mike Shove, said.

“Profitability is the true measure of results. Any one can buy revenue but are you making any money out of it?” While CSC scored some new contract wins, Shove was particularly pleased that major existing contracts had been retained.

“Renewing contracts that have been with us for four or five years vindicates outsourcing,” he said. “We are seeing a lot more selective sourcing as the market matures on both the vendor and customer sides.”

Shove said Australia represented two per cent of the world market but five per cent of CSC business, which made it disproportionately large and meant he was able to report directly to the president of the organisation.

However, profit levels of 5-6 per cent in Australia were still below the 8-10 per cent being recorded in some European subsidiaries of CSC and in the US federal sector.

Shove said the local outfit was performing well in the utility space but had room for improvement in the financial services market, citing its failure to attract the business of any major Australian banks.

CSC Australia revenues for the same 12-month period totalled about $1 billion, a single-digit percentage fall on the previous year, he said.

Shove attributed falling revenue levels to the performance of its PC reseller business and its recruitment arm, Paxus, both of which suffered drops of 10-12 per cent.

“The PC business was down in line with PC spending,” he said. “The recruitment business was also down because nobody was adding contractors when projects were being cancelled or delayed.

“But the recruitment business was ahead of plan for the past three months and we are also starting to see rebound in the PC business as people replace technology that is three or four years old following the Y2K refresh cycle.”

The global services company credited its increased profit levels to changes in its strategic business structure and client base. Staff numbers were trimmed by 400 during the year. Local operations now employed 3700 people.

Shove said most of the job losses were examples of “voluntary attrition” where staff had moved to new jobs and did not need replacing.

“We have improved our internal systems to drive more efficiency,” he said. “We now have less accounts clerks, deploying technical tools has meant we need less field service engineers, advanced helpdesk tools mean we are handling more calls with less people and we have also consolidated data centres.”

CSC would conduct more “fine tweaking” this year, Shove said. The company would look to increase efficiency by a further 7 per cent in the current financial year.

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