DWS revenue slides due to lower demand for IT contractors

DWS saw revenues tumble due to renegotiated panel agreements and a “tight” digital specialist labour market.

The IT outsourcing company posted a 16 percent decline in revenue for the half-year ending 31 December 2017 to $61.67 million, down from $73.74 million year-on-year.

Profits were up 12 percent to $10.13 million, compared with $9.07 million for the previous corresponding period, crediting “strong cost management”.

DWS renegotiated its way onto a number of supplier panels with "significant clients" but at lower rates. However, the company said that fewer rivals had been appointed to these panels, which should "lessen the impact of the reduction in rates".

And two-and-a-half years after acquiring user experience design company Symplicit, DWS admitted the firm would miss its "challenging earnout target".

“In response [to DWS’s revenue slide], we have invested in the business with the appointment of a national sales manager, a national operations manager and additional internal recruitment resources in Melbourne, Sydney and Brisbane to help drive organic growth and meet anticipated higher demand from our clients,” DWS managing director Danny Wallis said.

“We thank our staff for their hard work and dedication and our clients for their ongoing support and we look forward to assisting our clients in achieving their goals in 2018.”

DWS maintained a high utilisation rate as demand in the banking, finance and utility sectors were stronger, although demand was reduced in IT, communications and government.

There was also an increase in consulting staff to 606 for the period, up from 596 for the half year ending in June 2017, as demand for permanent staff offset a reduction in demand for contractors.

The company said it will focus on recruiting digital specialists in the upcoming half year and continue to increase the proportion of digital work provided.

DWS hired Campbell Johnston, former CEO of Motorola partner Progility Technologies, as its national sales manager in September last year, while Malcolm Sheehan was hired as national operations manager in August.

The company last year was involved in a bidding war with Perth-based rival ASG Group over SMS Management and Technology, which it subsequently lost after ASG swooped in to offer $124 million for the IT services company.