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BT Buys INS and Moves Up the US IT Value Chain| February 2, 2007| Business Telecom Services - Europe | Competitive Intelligence Report | Client Access Analyst: Sandra O'Boyle
Current Perspective: Positive
On February 1st BT agreed on terms to acquire International Network Services, Inc., a provider of IT consulting and software solutions based in Santa Clara, California. INS specializes in four major areas: enterprise architecture and governance, business productivity, information risk management and infrastructure transformation. INS employs a staff of 1,000 consultants and it has offices in Europe and Asia. Analytical Summary • Current Perspective: Positive on the acquisition of INS, because this improves BT’s professional services and consulting capabilities in the US by adding a force of 600 IT professionals, and it takes BT’s billable consultants to over 8,000 worldwide. This strengthens BT’s IT services capabilities and market position versus system integrators and other global carriers. • Vendor Importance: High to BT, as the INS acquisition is strategic to BT, which needed to improve its professional services capabilities in order to add value and engage a C-level audience within global MNCs. Cracking the US market is a top priority for BT and INS is BT’s fourth acquisition in the US in the last couple of years, following Infonet, Radianz and Counterpane. • Market Impact: Low on the pan-European business telecom market, because INS adds just over one hundred consultants in Europe and BT’s old Syntegra and consultant hires from IBM and Accenture are far more active in Europe. However, over time, INS’ know-how and replicable solutions will be integrated into BT’s global go-to-market strategy, and competitors need to plan their own professional services strategy. Recommended Competitor Actions • AT&T and Verizon Business clearly have not much to fear from BT GS in the domestic US market place, but their international services proposition will be affected, because their professional services presence in Europe and Asia is not impressive and it does not match the BT Europe-US coverage now. • Orange Business Services is also building its US presence – albeit slower and organically. However, to penetrate the US public sector, Orange Business Services will need to acquire a well-established US SI or create a strong SI alliance partnership. • Major SIs such as HP and IBM can expect much higher-profiled RFP bidding competition from BT GS both in the US and Europe. They should emphasize the lost impartiality of the INS advisory services, and at the same time make sure that their own professional services cannot be accused of unduly preferring their own hardware. • Outsourcers such as Accenture, EDS and CSC can match (and surpass) BT GS in terms of global consultant strength, and they should especially emphasize the lack of serious professional services capabilities of all the global carriers in the Asian theatre.
• US customers should consider BT’s new IT consulting and professional services competence with the INS acquisition. The company has served some 75% of Fortune 500 enterprises and more than half of the Fortune 1,000 companies. • Potential customers should inquire about the timetable regarding migration and integration for this merger. While BT has integration experience with past mergers and it plans to operate INS as a subsidiary in the short term, there are the risks of disruptions that these changes can evoke.
Business Telecom Services - Europe
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