Atos Hits the Ground Running Following SIS Acquisition

| Jul 12, 2011 | Data Center Services
| Analyst: Michal Halama

Event Summary

July 5, 2011 – Atos Origin updated industry analysts on its strategy following completion of its Siemens IT Solutions & Services (SIS) acquisition. The combined entity will be called ‘Atos’ and have pro forma revenues of Euro 8.7 billion (based on FY2010 results), with Euro 7.4 billion in Europe elevating it to second place among largest IT service providers operating in Europe. Atos will have direct presence in more than 42 countries through 78,500 employees.

Quick Take

Analytical Summary

• Current Perspective: Moderate on Atos’ new strategy (in combination with its takeover of Siemens IT Solutions & Services), because it is mostly clear and aligned with the combined companies’ existing strengths in Europe and global service lines (for more information please see Atos Origin Company Assessment). Atos tempers its ambitions to its existing strengths, but some of its chosen verticals (e.g., public sector) for global growth offerings and its logo growth plan are challenging. Completing the structural reorganization of the merged businesses and getting works council agreements demonstrates efficiency and management leadership, but could put a brake on offshore options.

• Vendor Importance: Very high to Atos, because it needs a clear and achievable combined strategy around which Atos Origin and Siemens IT Solutions & Services can rally and hit the ground running following the merger. Individually both faced internal problems, together they face intense competitive responses from local European (e.g., Capgemini, T-Systems), US-based HP and Accenture (now that Atos is of a scale), as well as India-based players (e.g., Wipro, Infosys). The complementary logo sets present cross-selling opportunities initially that will relieve pressures to offshore and spend on developing new solutions.

• Market Impact: Moderate on the IT services market in Europe, because no game changing innovative solutions arise from the merger; rivals are accustomed to competing with the product set already on offer; and customers are unlikely to switch to Atos because of its new scale – clients would choose the far larger IBM for scale. Competitors will now have to fight harder once Atos competes by exploiting synergies in logos and leveraging the greater depth in its footprint (in its most significant markets) rather than expanding for growth globally.

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Competitive Strengths and Weaknesses

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