May and June 2002 saw a host of acquisitions in the IT services market. In particular, as professional services firms continued to separate their auditing and consulting businesses, the largest deals in the period involved the sale of KPMG International‘s various European consulting businesses.

In 2001, the US consulting business of professional services firm KPMG International was spun out to form KPMG Consulting, but the new company did not

encompass any of KPMG International’s European divisions — until now.

For $685 million, KPMG Consulting has bought KPMG International’s consulting practices in Germany, Switzerland and Austria. With 3,200 employees and 2001 revenues of $540 million, these practices are expected to give KPMG Consulting a significant international boost.

However, KPMG Consulting missed out on the chance to buy KPMG International’s consulting operations in the UK and the Netherlands. These were sold to Franco-Dutch IT services company Atos Origin for €657 million. The two practices have combined annual sales of €600 million, and a combined headcount of 2,800 employees. For Atos Origin, the deal provides wider geographic reach, more than doubling its business in the UK and transforming it into the largest IT services company in the Netherlands. It also boosts Atos Origin’s consultancy practice, which will now account for approximately 18% of its overall business, up from 2%.

In the US, PC maker Dell Computer has bought Plural, an IT services company with 200 employees, for an undisclosed amount. Privately held Plural counts Microsoft among its investors, and has a particular focus on application development, integration and deployment in the Microsoft environment.

Dell has been talking about strengthening its services business, which generated revenues of $2.5 billion in 2001, for some years. In a market where profit margins on commodity hardware such as PCs are continually squeezed, IT services and consulting have become vital businesses for hardware companies.

To strengthen its services arm, Dell poached Jeff Lynn from Compaq’s services business in 2001 to take over as its vice president of professional services. In the short term, Plural will operate as an independent unit within Dell. But if Dell is really serious about boosting its services business, it will need to make a lot more acquisitions in this area.