All Aboard the Mayflower.com

 
 
By John Moore  |  Posted 2001-02-12 Email Print this article Print
 
 
 
 
 
 
 

Despite the market downturn, European consulting firms are setting sail for U.S. shores.

It wouldnt seem the most auspicious time to chart a course for the U.S. market, but a number of European Internet consultancies are determined to have a go.

Take, for instance, NetJuice Consulting. Spains largest Internet consultancy last month took the wraps off its Miami operation, its first U.S. office. NetJuice plans to use Miami as a springboard to expand in Latin America and eventually other U.S. locations, which potentially could include California, New York and Texas.

Elsewhere, Netdecisions, a London-based e-commerce integrator, opened its first U.S. office last year in San Francisco and recently added a second office in Washington, D.C. Also from London, WPP Group plc has entered the U.S. Internet services market through the acquisition of a Minneapolis-based consultancy and its investment in Roundarch Inc., an integrator with offices in several U.S. cities.

European consultancies that have been active for years on this side of the pond also are in expansion mode. Plaut AG, a German integrator that launched a U.S. subsidiary in 1995, has been hiring personnel and eyeing acquisitions to drive its U.S. business. The company expects North America to comprise half of its revenue over the next couple of years.

A number of factors are driving this seemingly ill-timed European push. For one, the shakiness of the U.S. market has loosened what has been a tight labor situation, making it easier for companies to staff up.

With the downturn of iXL, MarchFirst and Razorfish, among others, "we are actually seeing an increase in the number of qualified consultants," says Michael Picard, VP of e-business at Plaut Consulting Inc., the Boston-based North American arm of Plaut. "We dont see a lack of resources as being an issue to us getting to where we want to be," he says, adding that was hardly the case a year ago.

Peter Montadas, VP of NetJuices Miami-based Latin American Region, says the availability of Internet expertise in the United States is a key draw for the Spanish company. "Its a talent issue," Montadas says, adding that the United States, in general, is an important strategic direction for Spain. "The U.S. market for Internet technologies is the most mature … and the most evolved."

Another factor in European firms favor may be the multiples at which U.S. Internet professional-services firms are selling. Multiples have declined sharply in recent months, as stock prices in the sector have plummeted amid the overall decline of the Internet economy.

"From a valuation standpoint, its an opportunity," notes Ben Fuller, president of Framfab USA, the Sunnyvale, Calif., unit of Framfab AB, an Internet consultancy based in Sweden. Fuller cautions, however, that companies on the acquisition trail have to research their candidates carefully, identifying those that are well-connected and able to sell projects in a difficult market. Framfab purchased Fullers company in 1999 to launch its U.S. business, which includes the Sunnyvale headquarters and an office in New York.

Chad Gallant, co-managing director of Icon Nicholson, the New York arm of another Swedish firm, Icon Medialab, says the Europeans will face a tough challenge in the U.S. market. "Its a long legacy of struggle," he says.

More recent acquisitions by European firms include WPPs purchase of Imaginet LLC, a Minneapolis e-services consultancy. Imaginet, which announced the deal last month, will operate as a division of WPPs J. Walter Thompson advertising group. WPP also has U.S. market reach through Roundarch, an e-customer-relationship-management specialist that the media giant backs along with BroadVision and Deloitte Consulting.

Plaut, meanwhile, bolstered its U.S. presence last October in its acquisition of J.J. Croney & Associates Inc. The Phoenix, Ariz., company provides application hosting and solutions for the hospitality market.

Executives involved in the U.S. ventures concede that the current market conditions arent particularly embracing for those hoping to grow a business here. But on the other hand, companies that establish themselves now will be well-positioned for the next growth wave, they contend. "In some ways … these times are the best," says Robert Eisenberg, Framfab USAs CEO.

The European challengers are certainly hoping so.

 
 
 
 
John writes the Contract Watch column and his own column for the Channel Insider.

John has covered the information-technology industry for 15 years, focusing on government issues, systems integrators, resellers and channel activities. Prior to working with Channel Insider, he was an editor at Smart Partner, and a department editor at Federal Computer Week, a newspaper covering federal information technology. At Federal Computer Week, John covered federal contractors and compiled the publication's annual ranking of the market's top 25 integrators. John also was a senior editor in the Washington, D.C., bureau of Computer Systems News.

 
 
 
 
 
 
 

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