CSC enters turnaround mode

Just a couple weeks into his new job, Computer Sciences Corp.’s CEO Mike Lawrie described a troubled company that is beginning a “significant turnaround effort.”

The company’s revenue is flat – a positive in this environment – but profitability is down because of problems with certain projects including a troubled project with the United Kingdom National Health Service contract, company officials said in an analyst call April 11.

“The business is significantly under performing,” Lawrie said. “We do have significant challenges but clearly it can be fixed.”

Among the issues he has identified are profitability from projects that were either won by bidding too low or have had performance issues.

Also, the market has significantly shifted but CSC has not moved quickly enough to higher value offerings, he said.

“Internally, the operating model is overly complex and lacks accountability,” Lawrie said. “The cost structure also doesn’t match the reality of business today.”

CSC also has not done a good job of integrating its acquisitions over the years, he said.

“There is significant work ahead and there will be restructuring going forward,” Lawrie said.

He plans to establish a leaner operation with clearer lines of accountability. “Needless to say there will be some leadership changes as we move forward,” he said.

Unprofitable contracts also will either need to be fixed or renegotiated, he said.

Lawrie did point out positives at the company including its public-sector business, software products, intellectual property and geographic presence. The company also continues to build its pipeline of new business.

By mid- to late summer, CSC will be able to lay out more concrete steps for the turnaround and the “metrics we will use to hold me and the management team accountable,” he said.

About the Author

Nick Wakeman is the editor-in-chief of Washington Technology. Follow him on Twitter: @nick_wakeman.

Reader Comments

Tue, Apr 17, 2012

CSC's constant reduction of experienced skilled personnel and "replaced" my low experience, lower cost personnel have helped to make some unprofitable contracts less of a financial burden but it certainly has not impressed the true clients, the people that depend on CSC for service. The client CIO may have been satisfied though by the cost reduction. CSC isn't the only outsourcing company that has tried this solution. When the client considers a contractor for some new business, they look at what has happened over the years with their existing contract.

Mon, Apr 16, 2012

Mike Lawrie is on target on all of the points that he made. CSC is (has been) so hungry to win new business that they under proce their bid to get the business. There is so much overhead in the comapny that it makes it nearly impossible for the company to be profitable without restructuring. CSC did the right thing to bring in an outsider.

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