Troubled Atos to cut staff costs further after latest quarterly results

Troubled IT services firm Atos Origin saw a 4.6% drop in sales for the third quarter, and it says it will...

Troubled IT services firm Atos Origin saw a 4.6% drop in sales for the third quarter, and it says it will continue to cut staff costs to try to get back on an even keel.

As the company doesn't post profit and loss figures, it is unclear what position the company is in, but it is still trying to deal with the fall-out from the recent loss of a memory stick containing the log-in details of users of the UK government's online Government Gateway portal.

It now faces losing the contract for that services job as a result, further adding to the company's woes.

For its latest quarter ended 30 September, the firm's posted results show that sales dropped 4.6% to around £1.08bn. After putting a positive spin on its results, Atos said it saw organic sales growth for the quarter of 5.3%, but this was after stripping out currency and disposal costs.

Philippe Germond, CEO of Atos Origin, said, "During the third quarter, we have been able to maintain an organic growth above 5% as planned. In early September, we anticipated a possibly more challenging economic environment and we decided to take appropriate action to further reduce our cost base.

"For 2008, we confirm our objective of revenue organic growth of above 5%."

The total value of UK third quarter sales rose by around 40%. Revenues due for the third quarter rose this year by 9% compared to the same period last year. Consulting services, which make up 10% of Atos Orign’s UK revenues saw a decrease in sales. 

An "action plan implemented in the UK is under way, including short-term sales initiatives made proactively in the systems integration market", said Atos.

The company managed to reduce its net debt during the quarter to around £327m, from the £392m on the books for the same quarter last year.

To cut costs further, Atos intends to expand its offshoring business in developing countries, while cutting more jobs in the established markets in which it operates.

There will also be a reduction in the number of subcontractors, the "adaptation of the bonus schemes to a new environment", a "freeze of all indirect recruitments and extreme caution on direct staff hiring", and a reduction in staff expenses such as travelling and training.

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