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Harvey Nash, the IT services supplier, has declared a 21% rise in annual profits on the back of 12 months of strong demand from Europe for senior tech personnel. In line with analyst Ovum’s expectations, the executive IT recruiter yesterday reported £58.5m in gross profit as of January 2008, compared to £48.3m in the same month last year. Revenues rose 27% from last year to £318.6m, while sales in the first two months of 2008 were “robust”, according to Albert Ellis, the company’s chief executive. Two factors largely explain these increases; international growth – HN bought agencies in Ireland and Spain – and investment in its traditional recruitment market. Its purchase of SilkRoad Systems, a Vietnamese-based IT outsourcer, also allowed it to meet “record” demand from outfits seeking to offshore their IT and software development projects. The bulk of this demand for offshoring IT has come about from Harvey Nash’s existing clients, which have been the target of the groups’ “cross-selling” strategy. In the UK alone, the cross-selling of its services has generated over 20% of Harvey Nash’s total revenue, explained Ovum analyst Kate Hanaghan. “The company is doing a good job of cross-selling services into its client base - revenue from which accounts for a significant part of the growth it has achieved,” she said. “Harvey Nash is still enjoying the double benefit of strong demand for permanent staff placements in parallel with a growing demand for its offshore services.” The company’s gross profit from permanent IT placements in Europe has risen 39%, while its UK-based executive recruitment division reported an earnings jump of 43%. This enabled permanent staff revenue from its existing operations to jump 30% in 2007, while, over the same period, IT contractor income grew at more modest 23%. “Economic conditions were favourable throughout the year, with business confidence rising and demand for IT professionals outstripping supply” Harvey Nash said. However, while hires of permanent IT staff rose during 2007, the number of IT contractors it placed fell, delivering the contractor division only marginal profit increases. In Zurich, IT contractor volumes from the financial services sector were lowered, as they were in Germany, at the hands of cost reduction programmes (such as at Siemens). As a result, Harvey Nash turned its focus to market segments such as Engineering in Germany and clients in Geneva not directly impacted by the slowdown in financial services. Positively, the company suggested that any future reduction in IT contractor numbers would not be universal, nor would it be on the scale seen eight years ago. “Candidate confidence reflects a high level of demand for specialist skills with good quality applicants often receiving more than one offer,” Harvey Nash said. “We agree with the Gartner 1st Quarter Worldwide CIO Survey 2008 research that the scale of cut-backs in technology spend, following the downturn in 2000 has left much less excess capacity today.” Apr 18, 2008 Email this article Printer friendly page Previous Page
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