Oakton's India outsourcing accounts for quarter of production

Oakton's India outsourcing accounts for quarter of production

Summary: In its possibly last set of results as an independent company, Oakton has highlighted the demand for cloud and outsourcing as many of its customers are deferring and delaying projects across the market.

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With challenging conditions throughout the 2014 financial year, Oakton has announced today its full-year net profit has fallen 9.1 percent to AU$8.3 million, but revenue for the company increased by 1.4 percent in the period.

In its potentially final set of full-year results as an independent company, following a AU$171 million cash offer from Dimension Data Australia for the company launched last week, the company said that customer focus on cost and value was leading to demand for cloud and offshore services.

To that end, Oakton's Hyderabad office in India contributed 26 percent of the company's billable hours, up 6 percentage points on last year, and is forecast to grow about 30 percent for the 2015 financial year. Of the 1203 employees in the company, 309 currently reside in India.

"The long term investment in our offshore facility in Hyderabad is again making a significant contribution to our performance and our strategic positioning," said Oakton managing director and CEO, Neil Wilson in a statement.

"Our ability to meet reduced price expectations from our customers has enabled us to maintain and improve market share in a number of sectors."

Looking ahead, the company said it plans to increase market share and meet customer demand for cloud, mobility, information management, and core system enhancements solutions, that are increasingly being offered "as-a-service".

However the biggest issue to impact the company over the next financial year will be the AU$171 million offer from Dimension Data Australia to purchase all Oakton shares. The AU$1.90 a share price offered by Dimension Data represented a 30 percent premium on Oakton's closing share price at the time, at August 11, and a 43 percent premium on Oakton's 3 month volume weighted average share price at the time of the offer.

Oakton's board unanimously recommended the offer to the company's shareholders, and said in a statement that the board will vote all Oakton shares held by them in favour of the proposal.

It is expected that a shareholder meeting to approve the deal be will held in November. If shareholder approval is obtained, the offer will still need to be approved the Victorian Supreme Court.

Topics: Cloud, Enterprise Software, India, Australia

About

Chris started his journalistic adventure in 2006 as the Editor of Builder AU after originally joining CBS as a programmer. After a Canadian sojourn, he returned in 2011 as the Editor of TechRepublic Australia, and is now the Australian Editor of ZDNet.

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