Wednesday, 18 December 2013

Is CSC really transforming itself or just running round in circles?

Only time will tell if CSC’s management is transforming the company fast enough and in the right way to avoid its profitability collapsing as significant changes occur and as Nemesis in the form of the Securities and Exchange Commission and aggrieved investors doggedly continue investigations into the company.
 We see three themes emerging which ought to concern employees, investors and customers.
Firstly: with the cost reduction program well under way it is now obvious that CSC is targeting old-style outsourcing and consulting as it slashes headcount across the board and closes facilities. We do not argue that much of this needs doing but continue to question the intelligence that has gone into what look like pretty crude changes. Many would say ‘the baby is being thrown out with the bath water’.
Secondly: new business is just not being signed up.  See our post on this from July 2013 and the later one in October. According to CSC’s own press announcements not a single significant contract has been signed outside the USA this year. Those signed within the USA are all US government focused and part of multi-supplier deals where CSC is one of 15 and more in a single contract. No revenue has been attributed by CSC in any of these contracts, which means we do not know just how big, or little, they really are. Therefore as far as we can see the new business has to come from the acquisitions of which there have been many. The question is do they fill the gap in terms of revenues and profitability lost elsewhere? Another question is, why is CSC’s commercial business in apparent decline? Even current customers are walking away.  We have commented on that and wondered why CSC seems to be letting this happen. The latest being Tryg a longstanding customer in Denmark who has served notice to close a contract and transfer the business to Tata. This story has appeared in on-line news in both the The Business Standard and in The Times of  India
 Thirdly: the SEC has served yet another Wells notice, story (link here) this time to the company itself, not an individual. CSC has not chosen to comment on this matter as it has the right to do. But for the sake of its reputation and good relationships with customers and employees they ought to say something, even if it is only to acknowledge such an event has occurred and that it is dealing with it. Whatever happened to the investigation into irregularities that was mandated by CSC's own Audit Committee? Were the findings too embarrassing to be published? To cap it all,  CSC’s alleged involvement in flights of rendition, story link here from the German press, has almost certainly caused potential and current customers to question whether they wish to be viewed as a business partner of a company like CSC.
 As calendar year 2013 closes there are just three months left for CSC to show good solid financial results (not smoke and mirrors) to investors. CSC may still be able to put together a good story as the loss-making business are closed, overheads are reduced, and the integration of newly acquired businesses provide the opportunity to restate financial comparators.  
At the beginning of this post we asked, is CSC really transforming itself or just running round in circles confusing motion for progress? Only time will tell.


12 comments:

Anonymous said...

Observations from the inside (US BPS Division) -
1. 401k changes so that company contributions are held until after the end of the calendar year. If an employee leaves or is sacked, the company 401k match is forfeited.
2. Draconian rules for travel that apply even to those doing sales calls. Sales people have to jump ridiculous bureaucratic hurdles to get approval to travel to prospects.
3. Continued sacking of mid and lower level employees. No end in sight to the "Get Fit" program.
4. US employees still don't know their job titles and matrix managers are confused and disorganized since the sackings have left huge holes.
5. Any employee showing less that 75% utilization of the utilization reports are in danger of sacking regardless of their work performance, abilities, or tenure.
6. Customers complaining of missed SLA's and poor performance across the board.
7. New customers unimpressed with CSC's green sales force.

All indications that decisions are being made to reduce short term costs without regards to the ability to execute and win revenue. Appears the focus is on "Getting Fit' for a sale of the whole company and/or a split and sale at the division level. The wise employee is looking to leave and leave this ship before it sinks.

Anonymous said...

Meanwhile here in the UK Lizzie the Lizard crows over her brand new glitzy office building in central London.

Staff earmarked for this new palace are told that they have to work from the office and not at home - because collaborative working is the way forward.

Try telling that Lizzie to all the staff you have kicked out of pretty much every office CSC had in the UK.

One rule for you and your mates, another for the plebs.

Still at least the "FAQ" tells us that this new office isn't part of the cost saving programme.... no shit.

Anonymous said...

So many petty policy changes - perhaps they save the company a bit of money - but at what cost to morale and effectiveness. From the reorg I did receive a promotion, up a level, which is fantastic and fantastically difficult. However, no raise, which is not so fantastic and of course lost my bonus like everyone else. On the plus side, my customers are at the moment happy and the low-morale CSC team continues to deliver like champs and on schedule and on budget.

Anonymous said...

As one of the Middle Managers who was subject to CSC's "Reduction in Force" i.e. RIF in the US CSC were indiscriminate in the people they let go. My salary was actually funded by a vendor for a full 12 months so I was a ZERO cost resource to CSC. We produced 4 offerings which were competitive marketplace offerings during this time. May adage is treat the company's money as if it is your own - so following that adage - CSC should see that this guy costs me nothing, produced 4 solid market offerings so what will I do - OH I am going to fire him. What a farce This company is so screwed up - By all means restructure but If there is no increase in revenue no new business - no increase in profitability then the guy out the door should be Lawrie - he had 2 years next month with no progress - BTW promoted with no salary increase has been going on for 10 years - unless you are C Level of course.

Anonymous said...

CSC Total Mess

Anonymous said...

Another Class Action lawsuit against CSC. This time alleging that the NCTracks program in North Carolina has been a disaster. Details on:

http://legalnewsline.com/issues/class-action/246786-class-action-alleges-n-c-medicaid-service-creating-problems

Anonymous said...

You know what all this slashing and burning is not working. What is needed is designing and building. But it seems that the new management only know how to operate knives and blow torches when they need to be able to draw and build, as well as talk less and deliver more.

Anonymous said...

CSC continues to be unable to win new business and increase revenue. Moreover, customers are leaving CSC and partnering with IBM, Accenture etc. Morale is at an all time low. The only strategy that CSC management knows how to implement is to continue the process of Reduction in Force (RIF) and not treating their employees with the professionalism and respect that their employees provide to their customers. CSC is not in a good situation.

Anonymous said...

No different down here in Australia to the rest of the world when it comes to CSC. Redundanices all over but its only the techies that are being let go, not a single manager, and then our sales force has been boosted by over 100 new sales staff.

So we'll try and win new business, if we do we'll be able to manage the client but there will be no-one to actually do the work because those of us techs who are left are already overworked because we've had to pick up the workloads of those that were made redundant, all because idiot managers couldn't figure out what people did day to day for the client and didn't realise just how much work is going on.

Add to this a fairly high-level manager in India telling us the other week that CSC isn't interested in any account that is less than 20,000 seats.....Do these people not realise that every account in Australia is less than 20,000 seats.

If CSC wants to abandon Australia because the accounts are too small, morale will go through the roof in the CSC offices down here...But wait they won't have to abandon accounts because the clients are already fed up with CSC and moving to te competitors just like the rest of the world.

I say let this company fall flat on its face and I for one will be happy to work for a decent outsourcing company here in Australia who acutally knows how to obtain new business and keep existing clients happy.

Anonymous said...

It will be interesting to see how CSC and its' stock survives the internal turmoil upper management is creating amongst its' employees. Not only have we had major RIFs during this transformation process but had our job titles changed to reflect lower salary ranges. Now with merit increase upon us 80% or more of the employees who keep the company running day-to-day will get 0% raise even if you got a EXCEEDS GPAR rating if your salary range is now above max. They know their is going to be mass attrition of employees and do not give a damn because the ones who leave will be the experienced and knowledgable ones who are the higher paid with more vacation and they will replace with resources who have less experience and lower salary. The clients are going to suffer BIG TIME. Oh and Lawrie probably will get another $20M bonus again this year for destroyinig CSC. Oh and this fiscal year look for the target to be 95% billable labor utilization so plan on working on those holidays, not being sick and forget about vacation time.

Anonymous said...

Only in the current business climate (of the past 30 years!) can you destroy a company while sucking it dry in terms of stock options, bonuses and 500 to 1 pay increases.

CSC federal contractors have had all their sensitive personal information hacked thanks to the Chinese hacking scandal and yet CSC is offering no pay increases even as they advise how to obtain credit monitoring services.

My spouse was one such employee. And we were also victims of the Blue Cross hack. Same firm monitoring both sets of victims. I bet it is a good year for them, especially if they're publicly traded!

The Social Critic said...

It's not just CSC that will fall flat on its face. The nature of publicly trading an outsource (contracting) firm is particularly punishing as a business model. Sooner or later all the "musical chairs" will disappear in this global parasitical game, and everyone will be a semi-unemployed contractor.

Keep in mind: The a la carte business model is being propagated from IT into other sectors, and not just the low-end of the labor force, either. The conversion from career to contractor is on the rise for the legal and medical professions too, and championed by no less than the likes of Anne-Marie Slaughter, an Ivy-league professor who has been singing the praises of this New World Order (her words!) since the 1990s (she is also a proponent of the Trans-Pacific Trade Partnership that was so beneficial that nobody, media nor Congress, was allowed to get their hands on the text to appreciate it's supposed benefits).

Reality check! Do these people KNOW that their best-laid economic plans are going to fracture the career trajectory of many people in many industries across many countries, thereby leading not to increased competitiveness but, over the long haul, in a decline in the ability for the average worker to keep current with skills in direct parallel to the decline of "traditional employment"? Cut-throat, outsourced-based globalization will only rotate more and more of the workforce onto the "bench" (sidelines of the economic game), guaranteeing that worker skill sets will atrophy with each spate of unwanted (even temporary) joblessness. Workers, by necessity, may end up with the capacity to wear multiple career "hats", but to go deep — to really be good at a job you can't hold for more than a couple of years at a time under a free-trading New World Order economy — will be increasingly scarce. This will make the few who can hang on to Mr. Toad's wild economic ride more valuable, but in the end too scarce to meet demands and the overall quality of the workforce (and economic mobility of its participants) will decline. I expect it will come to the point within the next 30 years where we will see routine product/production shortages, major consumer safety lapses and wholly preventable fallouts from this barebones, just-in-time (a-la-carte) business model that management models of today embrace.

We need to step back from these middle-man, just-in-time business models and bring back an emphasis on QUALITY personnel and long-term business management techniques. But the pressure to see temporary stock gains and end-of-year bonuses for upper level management has converted most to a game of economic chicken like no other on the scale we are witnessing today.

Members of a labor force are not merely cogs in a machine. To conceive of human capital that way is such a turn-of-the-century Industrial Revolution idea! To continue to manage a company on this basis is to underestimate the damage the outsourcing and just-in-time models will ultimately do to the world economy. With less economic continuity all manner of economic growth will suffer, from consumer spending to hiring and back again.

We are digging a global GRAVEYARD with the help of the idiot (greedy) elites. Far from "conspiracy" such observations are common sense to anyone who has been paying attention since the mid 1980s. The late financier and billionaire Sir James Goldsmith wrote "The Trap" in the mid 1990s warning of where these trade/management trends are headed. Goldsmith predicted the Greek crisis as a result of joining the Eurozone in the '90s, and he testified before Congress that the first among many free-trade treaties — GATT — would ultimately undermine economic growth. Was anybody listening? They ought to be now! His was pure economic prophecy. I advise anyone who reads this comment to get their hands on Goldsmith's book.