Datacom's good times roll on

Datacom, New Zealand's biggest locally owned IT services firm, has posted another year of record profits and revenues with sales topping $300 million for the first time.

The company, which celebrates its 40th anniversary this year, grew revenues 17 per cent to $306 million for the year to March 31.

Net profit rose 4 per cent to $17.3 million and the company paid out $16 million in dividends to shareholders, which include 28 per cent-owner NZ Post. Last year's profit figure was boosted by a $1.7 million gain from a release of provisions.

Datacom doesn't appear to have missed a beat during the past 10 years, having increased its revenues at an annual compound growth rate of 12 per cent.

It now employs 1819 staff -- up about 100 on a year ago -- of whom 1160 are based in New Zealand and 657 in Australia and Asia.

This makes it New Zealand's second largest employer of IT staff after EDS New Zealand. Telecom's IT arm Gen-i, which on Friday reported revenues of $267 million for the year to June, employs about 1800 staff in New Zealand and Australia.

Datacom chairman Frank Stevenson says demand is "strong across the board" for Datacom's software development, systems integration, outsourcing and technical support services.

Mr Stevenson says Datacom's Australian arm is now a "significant contributor to group results".

Revenues from Australia and Asia grew 27 per cent to $83 million during the year to March and are expected to approach $100 million in 2006.

Datacom's solid result follows bumper years for EDS New Zealand and IBM. In June, EDS reported a 26 per cent jump in turnover to $411.8 million in 2004 while IBM New Zealand last month reported a 10 per cent rise in revenues to $390 million for the same period.

The good times look set to continue. International market researcher Forrester last week published details of a survey of IT spending intentions among corporates and government agencies in the Asia Pacific.

Of 125 organisations surveyed in Australia and New Zealand, 38 per cent signalled they would spend more on IT in 2005 than last year, with 17 per cent flagging reductions in spending. This put the region "squarely between a bullish North America and a bearish Europe", says Forrester.

It says 19 per cent of organisations surveyed in Australasia plan to hire additional IT staff this year, versus 9 per cent which are downsizing.

Mr Stevenson says Datacom hasn't experienced problems recruiting or retaining staff in Auckland though there is more competition between employers in Wellington and he expects this may intensify, depending on the economy.

He says there is no secret to attracting staff.

"Run nice ads, big enough ads with enough words in them, often enough."

- nzpa