Bernard Bourigeaud, one of the longest-serving CEOs in the IT services industry, is to step down from French vendor Atos Origin. The news came as the company announced a fall in operating profit margin in the first half of the year caused by restructuring and continuing weakness in the UK.
Bourigeaud, who has led Atos Origin since its inception in 1996, will remain at the company until the end of this year, but at some time before October, he will hand over his roles of CEO and chairman of the management board to Philippe Germond, a former Alcatel and HP senior executive who was appointed as Bourigeaud’s number two in June.
In the six months ended June 30, 2007, the company increased operating profit 83% to 108m euros ($147m), which included a 22m-euro ($30m) gain from the disposal of its Actis EDI unit in Germany.
The operating margin fell to 4.1% of sales down from 4.9% in the year-ago period, but the company said it is sticking to its earlier target of reaching a margin of 4.6% in 2007 and doubling this level in 2009.
Revenue rose 7.2% to 2.89bn euros ($3.9bn) , which included organic growth of only 2.7%. The main problem area was consulting, where sales fell 6.5% due to a reduction in headcount at its UK practice at the end of last year.
Systems integration revenue also fell in the UK and Ital as a result of restructuring, but stronger performance in Benelux, Germany, and Spain helped drive organic growth of 3.9% in overall SI sales.
Atos Origin’s outsourcing sales rose 3.1% at an organic level, although the UK arm continued to struggle due to the loss of a major contract with the Metropolitan Police last year. Last week, the company also lost a contract with the UK Department of Health to provide diagnostics services, but it did close 290m pounds ($580m) worth of new deals in the UK in the first half with clients including Inter-Continental and Premier Inn.
Atos Origin’s shares fell 2.3% in morning trading on the Paris Stock Exchange following the announcements, giving it a market capitalization of 2.9bn euros ($4bn).
It has been an eventful year for Atos Origin, which called off takeover talks with potential buyers in May, and also embarked on a large-scale restructuring program called the 303 Transformation Plan to improve performance by industrializing more of its service offerings and ramping up its use of offshore sourcing.
The company claims to be making steady progress with its Transformation Plan, and Germond will need to keep on track with this or the pressure will mount from its major shareholders to assess interest from potential suitors.
Bourigeaud has built the reputation of being one of the most successful executors of M&As in the IT services sector, but unless Germond can take on the baton from Bourigeaud and deliver some fresh momentum, the company could well follow rivals Getronics and Xansa in being swallowed up in the latest round of consolidation in the European IT services sector.