Accenture hit by NHS losses

Consultancy giant Accenture expects to lose up to $150m (£80m) on its contracts with the NHS this year.

In its latest quarterly results, the company revealed that $38m (£20m) of losses have been recorded on the deals for the NHS National Programme for IT (NPfIT) in the first six months of its financial year. Accenture says the contracts will not be profitable until 2007.

Implementation delays on the supplier's two NPfIT deals also contributed to a fall in profit margins as payment for work was postponed.

'The sheer scale of these two NHS mega-deals means that delays in deployment/payment punched a huge hole in Accenture's worldwide government business margins, which fell to 2.6 per cent from 9.2 per cent,' said Ovum analyst Douglas Hayward.

'By my reckoning, 4.6 percentage points of that margin fall was NHS-caused.'

Hayward says other supplier involved in the £6bn project may also be affected.

'This is a real warning to other companies involved in this programme - especially those without many other mega-deals to fall back on,' he said.

'Richard Granger, the NHS IT chief, is still playing hardball and is clearly only prepared to pay when he feels the service is truly delivered. Is Accenture the last to be in this position? I doubt it.'

Overall, Accenture's results were more healthy. Second quarter revenue increased 15 per cent year-on-year to $3.8bn (£2bn), with earnings per share up 59 per cent to 35 cents.

See also:

IT leaders must channel spending

How much is too much?  01 Jun 2005

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