Hired labour

Human capital management (HCM) software, used to automate much of the job of managing people, became the latest corner of the business applications industry to garner attention from wealthy suitors in April 2007.

Kronos, a veteran of thirty years in the workforce software market, was bought by private equity fund Hellman & Friedman (H&F) for a stunning $1.8 billion in cash, a 34% uplift on its share price prior to the approach. The upside for Hellman & Friedman is pretty clear: Kronos, where revenues grew 16% to $578 million in fiscal 2006) recently reported its 79th consecutive quarter of profitability – one of the longest runs in the history of the software industry.

The precise effect that going private will have on Kronos is unsure, but Hellman & Friedman has a reputation of picking up safe investments and leaving the management teams in place. Kronos customers – such as Qantas, STA Travel, IKEA and New Look – can therefore expect business to carry on as usual.

Workbrain, a Canadian competitor to Kronos, was in the same week picked up by Infor, the privately-backed consolidator of the mid-market ERP world, for $280 million. Workbrain’s revenues for 2006 stood at $96.5 million, up 9%, although it slipped into the red for the year. However, the company, which counts British Airways, Target and General Mills among its flagship customers, is moving into 2007 with more confidence having recently signed a deal with a large retailer (identity still undisclosed) worth $3.1 million in software fees in 2007 alone.

Global catch-up

Because IT services giant Computer Sciences Corp derives a significant proportion of its revenues from US government and defence contracts, it has often been shy of placing work offshore. But not any more. Before the company’s $1.3 billion acquisition of US-headquartered IT services company  Covansys in April, CSC could boast only 7,000 employees in India, a weak capacity compared to IBM and Accenture who number 45,000 and 25,000 in India respectively.

Covansys may be Michigan-based but its roots are largely in India. The acquisition will raise CSC’s Indian headcount to 14,000, giving it the fifth largest capacity on the sub-continent of any Western company. The deal comes after Covansys reported a weak fiscal year to 31 March. While many of its rivals have been growing at between 40% and 60%, the company could only muster a 5% rise in revenues to $455.5 million.

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

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