Long-awaited news came at the end of July as the fate of Xansa was finally decided after its board recommended an offer from French IT services provider Steria.

Xansa had for some time looked a somewhat likely target – long before being weakened in June by the departure of its CEO for pastures new. In mid-2005, when a large group of industry analysts were asked individually which company (if any) they thought would be taken over by an Indian company looking to build mass in Europe, Xansa was cited most frequently. As it has turned out, the acquisition by Steria is probably more synergistic for Xansa’s customers and employees than an Indian buyout would have been, and there may well be fewer integration difficulties from the perspective of the two parties.

Xansa’s lack of presence in mainland Europe (which the company dispensed with after a strategic decision in 2003 to consolidate to bases in the UK and India) would be seen by some potential customers as failing to meet their needs, and obviously Steria’s ownership will rectify that weakness. Probably Steria’s most prevalent weakness, meanwhile, was its lack of an offshore skills base, and the consequent inability to offer the pricing advantage that customers now expect in negotiating services deals – this is one area where Xansa brings considerable strength to the table, with its well-established off-shore presence (complemented by a successful delivery model that blends on-shore and off-shore capability for its customers) ably leveraging its 5,000 staff in India.

If a factor in the final vulnerability of Xansa was the evident lack of succession planning after CEO Alistair Cox moved on, this at least will not be crucial in the fate of Steria’s French compatriot Atos Origin. As Bernard Bourigeaud, one of the longest-serving CEOs in the IT services industry, stepped down after 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, his replacement was already to hand in Philippe Germond – seemingly, in fact, hand-picked for the top job (and well equipped, from experience in former roles with HP, Vivendi Universal, and Alcatel) when he joined the company.

Nevertheless, having only left behind in late spring strong speculation about its future, a fall in share price after its announcement of half-year results, and a significant turnaround challenge facing UK head Keith Wilman in his first year addressing that significant market for Atos Origin, the transformation plan that Mr Germond has already set underway must provide results rapidly if the company is not to follow Xansa in being a target perceived as high in the water.

Sleep cannot come easy to senior management in some of Europe’s services providers. There is a strong sense that there will be fewer of those jobs left as 2007 and 2008 progress.

Source: OpinionWire by Butler Group (www.butlergroup.com)