Situation in the Netherlands: ICT sector expected to keep up

• Stagnation for the Dutch IT sector
• ICT sector keeps on growing in 2009
• Striking acquisitions - Highlight

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Stagnation for the Dutch IT sector

Tuesday December 30 - Internal as well as external IT professionals are under pressure according to an inquest of E&Y. Only the investment drive of the government prevents a decline.

Dutch enterprises and institutions have not contracted extra external capacity past November for the first time since 3 years. Companies are also less inclined to take IT personnel on their payroll themselves: With 13 percent of the Dutch enterprises the number of IT professionals decreases, while 12 percent is hiring extra personnel, the inquest demonstrates by interviewing 600 managers and professionals on request of E&Y.

Government keeps on hiring

Especially the Government is keeping the sector upright. While the number of hired external Profs is decreasing in industry, trade, and services, the government keeps on investing. IT personnel in the industry and wholesale/ trade sector is not welcome anymore but the service sector and the government are still hiring new employees.

ICT sector keeps on growing in 2009

Budget reductions out of sight for the time being

Most managers expect that in spite of the credit crisis the ICT budgets will increase slightly or stay the same. This is the result of research under 600 managers.

ICT managers expect that the budgets for ICT investment will rise a little. They expect that in almost all sectors budgets for ICT will increase. Only the financial sector is an exception. That is the result of the ICT Barometer, market researh study of Ernst & Young under 600 managers.

Forty percent of the people they asked expect that the ICT budget will increase slightly, whilst 18 percent foresees a decline. The rest of the respondents expect the spending level the same as last year. The expectations are less favorable as earlier last year. In april 51% expected growth, only 11% foresaw a decrease of the budget amounts.

Main researcher Jacob Verschuur van E&Y has a remark on the outcome of the expectations for 2009. That the budgets are increasing or will stay put is no guarantee that spending will indeed take place.

In 2003 when the AEX stock exchange index was at the same level as end 2008, the budgets for Internet applications were cut off.

Striking acquisitions - Highlights

The M&A market were very active in 2008. In the first quarter the number of acquisitions almost doubles compared to the year before. In the first quarters the economic crisis hardly had any effect on the number of transactions. Later in the year 2008 smaller acquisitions were setting the tone.

CRN and Computable were assessing the most remarkable acquisitions within the Dutch ICT sector. Next to the larger takeovers, smaller ones, striking deals and cross border acquisitions were spotted.

Biggest acquisition

The largest acquisition with impact for the total Dutch ICT sector is the take over of EDS by HP. HP buys EDS definitively in May 2008. The take over of the total EDS organization is costing 13, 9 Billion US dollar. The agreement is executed in de second half of 2008. HP's turnover from services will double. IN the book year 2007 HP had a services turnover of 16,6 B dollar. The aggregated revenues of services of the two companies over 2007 were more then 38B dollar. The acquisition of EDS is almost the largest purchase ever of HP since 2002. That was the year when Compaq was acquired for 20B dollar.

At HP Netherlands and EDS are disappearing 420 jobs. That is 140 less then originally was assumed.

Striking deals in the Netherlands

In order to make profits again in 2010, Getronics will focus on standard workspace services and are the application services put for sale. This year the largest part of the divisions were sold of the business unit Business Application Services (BAS) that was for sale for already some time.

In the summer Cap Gemini buys a part of BAS for 255M euro. This transaction concerns the BAS domain Application Professional Services and Consulting (APS&C).

ICT service provider Total Specific Solutions (TSS) , the company of ICT millionaire Rinse Strikwerda purchases in December Business Solutions. The last remaining unsold part of Business Application Services (BAS).

TSS is taking over in July Getronics daughter company Everest, that delivers applications for front- and mid-office.

Next to the divestments of the Getronics/ ex Pink Roccade companies there was Unit4 Agresso signing on for a big acquisition. The business software vendor from Sliedrecht closes the purchase definitively in February 2008 of British colleague/ competitor CODA. End of March CODA was taken of the stock exchange and bought for 208M euro.

Detron ICT and Telecom Group is taking over in July - Kender Thijssen and ICT service providers Squire and XB. Founder George Banken wants to be the largest Dutch ICT services provider for the SMB market.

Atos sells Technical Automation; Atos Origin sells as per 31th of December the Dutch Technical Automation activities to Investment fund Gilde. Both parties have signed an agreement. Technical Automation (TA) will be merged with the company TASK24 at some moment in the future.

The divestment by Atos is justified by the fact that TA is not part of the core activities. After a very careful selection process TASK24 (supported by Gilde) was chosen as a party that has TA as core activity and for whom this take over is a strategic step and expansion. About the purchase sum no announcements were made.

Technical Automation is specialized in the development of software integrated products and systems of well known companies in Healthcare, industrial production, transport and aerospace. The unit is at this moment number 3 in the market of technical automation. They employ 220 people distributed over 2 locations in Utrecht and Eindhoven. All employees are taken over are by TASK24 that already has more then 330 employees.

31 December 2008 - KPN has completed the purchase of Debitel's Dutch activities. This reports the telecom operator with a press release without mentioning financial details. The transaction was announced at October 23 2008. KPN reported then that it takes over 300.000 post paid and 230.000 pre paid clients. These clients were already serviced through the network of KPN. IN 2007 Debitel had a net turnover of approx. 247M euro. The acquisition has been approved by the NMA (Dutch competition authority).

Cross border acquisitions

Many acquisitions are realized within the countries boundaries but there are also companies that are looking for a suitable candidate crossing the border.

Hippo. Vendor and supplier of open source enterprise content management-(ECM) and portal software expands to the US. The Dutch company takes over peer company BlueSunrise from San Francisco and gets presence in Silicon Valley in this way.

Centric purchases in January 2008 the German Oracle/ JD Edwards system integrator InOne. This company is supporting for already 12 years midsize companies in the area of ERP, CRM and manufacturing.

Imtech from Gouda strengthens itself in 2008 by acquisitions in various European countries. The services provider in mechanical, electrical engineering and ICT wants to grow to one of the strongest partners of IBM and Microsoft in Europe. In May the Swiss vendor, financial services provider Information Technology and Trust (IT&T) is acquired. In Germany SAP service partners Neo and BI supplier Stas are taken over. In Belgium market share is won by the acquisition of Fit IT, Ebit and Thinking Solutions.

Foreign companies are also eying Dutch enterprises.

Hardware vendor Pinnacle Data Systems from the US takes over in Feb. 08 Aspan Computer Repair Laboratories from Gelderland with 22 employees.

French software company and R&D outsourcer Alten SA is swallowing PTS Software. The company is specialized in technical software development. As a consequence of a merger the 170 technical software engineers and consultants who are divided over locations in Baarn, Eindhoven and Capelle a/d IJssel are entering into the payroll of the stock listed Alten Group.

The French company Sagem Securité (daughter of Safran SA) buys in June 2008 Sdu-Identification BV. The Dutch supplier of security solutions has approx. 300 employees.

Document digitalisation

The American Xerox Corp is taking over Veenman BV (sub of Corporate Express) for approx. 43M euro. Approx. 320 employees are getting a new name on their salary slip.

In September a second large acquisition takes place in the area of ECM. Konica Minolta Printing Solutions Benelux BV takes over Kopieer Systemen Nederland BV. 251 employees are getting a new boss.