Oakton looks to India for expansion

Local IT services Oakton today revealed it was planning to hire new staff, with 50 per cent of them to join its ranks over the next six months in India.
Written by Marina Freri, Contributor

Local IT services Oakton today revealed it was planning to hire new staff, with 50 per cent of them to join its ranks over the next six months in India.

The company has been operating in Australia for over two decades, and employs over 1080 employees in offices across Australia's capital cities as at the end of December, as well as in Hyderabad, India. The half-year people summary released today through the Australian Securities Exchange showed Oakton is planning to expand its human resources by 75 new employees, to be hired both in Australia and in India.

"Staff levels are expected to grow by 75 people in [the second half of the financial year] with a 50/50 onshore/offshore ratio," the company said in its briefing pack.

The summary highlighted a decrease in the total amount of human resources as of the end of December 2010, with 1085 people being employed against 1101 of the previous year. Victoria alone lost 69 employees since December 2009, but the local headcount is expected to grow in the second half of the current financial year.

Human resources expanded in New South Wales, Queensland and India, where employees grew from 112 to 129, with more to be hired through India's graduate recruitment program.

Oakton's managing director and CEO, Neil Wilson, said India offered high-skilled employees at a competitive wage rate. "In line with our strategy our Hyderabad office continues to grow and is providing access to high-level skills at a lower cost than otherwise available domestically," he said.

Besides the announced growth in human resources, Oakton is recovering from a shaky half, with the Victorian business impacting on the overall outcome. "Disappointingly, we have not met expectations in our Victorian operation, and this has materially impacted our results for the reporting period," Wilson said.

In fact, figures released by the Australian Securities Exchange (ASX) show Oakton has a reported net profit after tax (NPAT) of $7.3 million for the half year ended December 2010, which means a decrease of 29 per cent on the same period of the previous financial year. Furthermore, revenue fell by 4 per cent to $90 million and earnings before interest, taxes, depreciation and amortisation (EBITDA) decreased by 32 per cent.

After having suffered from the 2009 financial crisis, in early 2010 Oakton faced legal action as one of its clients, Tenix Solutions, lodged a $26 million damage claim against the company. The matter, still undergoing legal action, related to the delivery of a traffic infringement management system, developed for Tenix by Oakton. Oakton was at that time acting as a sub-contractor in a deal with the Victorian Government.

However, Wilson said dividends increased as Oakton's debt was reduced, enabling the company to achieve a payout dividend ratio of 45 per cent. Moreover, he said the long-term strategy to transform Oakton in a project specialist consulting and IT services company would continue to fuel Oakton's growth.

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