Keane Sales Dip As Offshore Rivals GrowKeane Sales Dip As Offshore Rivals Grow

Revenue for the IT services company Keane Inc. slipped 8% in the fourth quarter, though the company swung to a profit for the period after posting a $6.8 million loss a year ago. Keane also said Wednesday it will look to bolster its financial-services offerings by buying IT consulting firm Nims Associates for $20 million in cash and potentially an additional $15 million based on performance targets.

For the three months ending Dec. 31, Keane, which has U.S., near-shore-, and offshore-outsourcing services, posted revenue of $196.4 million, compared with $212.5 million a year ago. Net income was $6.5 million.

In a statement, CEO Brian Keane blamed the revenue dip on "continued softness in technology spending." Keane, like other North American-based IT services providers, is facing stiffer competition from companies offering more low-cost services from India. On Tuesday, Cognizant Technology Solutions reported that revenue in the fourth quarter increased 61% to $108 million. Keane operates service centers in the United States, Canada, and India, while most Indian firms, including Cognizant, operate primarily in India.

In response, Keane and other North American IT services firms are looking to increase their staff in India. BearingPoint on Wednesday revealed the opening of a new customer-service center in Chennai under a partnership arrangement with Covansys Corp. The company also plans to open a second facility in Bangalore.

For the full year 2003, Keane posted revenue of $805 million, compared with $873.2 million in 2002. Net income was $29.2 million, compared with $8.1 million in 2002, when the company took a $17.6 million restructuring charge.

In acquiring Nims Associates, a Decatur, Ill., company with $48 million in revenue last year, Keane says it hopes to increase its IT consulting and project-planning capabilities in the insurance and financial-services industry. Nims' clients include Fiserv, Filmtec, and Kemper Insurance. Nims chairman Bruce Nims is expected to retire after the close of the transaction, while Nims president Dwight Berryman will become a group VP at Keane.