How do you tempt a company with a successful IT department to consider an outsourcing deal? By putting the IT department into a jointly owned venture where the applications they have developed can be exploited and the financial benefits used to offset the cost of the operation. This is the deal that Hemel Hempstead, UK-based […]
How do you tempt a company with a successful IT department to consider an outsourcing deal? By putting the IT department into a jointly owned venture where the applications they have developed can be exploited and the financial benefits used to offset the cost of the operation. This is the deal that Hemel Hempstead, UK-based FI Group Plc has struck with the Bank of Scotland where the two companies have set up a joint venture called First Banking Systems Ltd. The Bank has 51% of the equity, which leaves it in the driving seat, yet it gains the advantages of outsourcing. As outsourcing outfits such as FI start to run out of the low hanging fruit of contracts, they will be increasingly faced with potential customers who have efficient, highly-skilled IT departments. These outfits have often built up considerable intellectual capital in the form of useful applications that only have one user. FIÆs innovative approach to the bank is typical of a company which has brought nothing but joy to shareholders since it was floated just over two years ago. The shares rose another 4.8% to 1797 pence yesterday on news that net income was up 63% to 4.6m pounds after revenues raced ahead by 64% to 161.6m pounds. At the year end, the order bank stood at 178m pounds – a rise of 62 percent – and with the number of long-term contracts up to 13, FI should comfortably meet its target of having 20 major partnerships by the year 2000. Profits this time were boosted by four months contribution from Indian software house IIS Infotech, which it acquired for 25.8m pounds. Clearly, FI needs to develop an international strategy through acquisitions and Europe will take precedence over an inevitable move into the US market. Year 2000 work currently accounts for 15% of revenues but, with a number of big contracts in banking, work on the euro is likely to prove a bigger long-term task. FI expects further progress in the current year.
