Unisys UK sees silver lining on banking clouds

(By Anthony Miller - Thursday 26th Feb. 2009 6:15pm). I recently caught up with Duncan Tait, Unisys MD for the UK, Middle East and Africa, and sensed a somewhat more upbeat assessment of Unisys’ fortunes in the UK than might be garnered from their recent woeful group results (see Unisys – in dire need of a raison d’etre). Besides looking after the UK, Tait also runs Unisys’ operations in Africa and the Middle East, though I’d be surprised if that amounted to any more than 15-20% of his territory. As it happens, Unisys is growing strongly in Africa (I suspect we’re talking double-digits here), as most of Unisys’ business is in the public sector, particularly, policing and security. Of course, the 2010 World Cup will also offer some opportunities too.

Unisys has kind of slipped off our radar in recent years, partly because it is very coy about breaking out their revenues. We know their Europe/Africa business was 35% of the group’s $5.2bn revenues last year so, on that basis, we’d estimate that Unisys UK revenues were around £500m, of which we assume ~90% is IT services, probably just enough to retain a spot in the UK Top 20.

As you might expect from its heritage, the backbone of Unisys’ UK business is in Banking, where it still processes some 70% of payments going through the UK banking system. What is perhaps less well known is that 40% of the UK’s mortgage processing runs on Unisys software, and I understand there may be some interesting announcements coming up in this area later in the year. While you might think mortgage processing is rather in the doldrums at present – and you’d be right – there are aspects which are enjoying somewhat of an ‘unfortunate’ revival, notably arrears handling. This is looking like fertile ground for Unisys.

Unisys’ other strong suit here in the UK is public sector, again focused around policing and security, but also including local government. These are all good places to be.

Meeting Duncan Tait, I felt that Unisys’ ‘raison d’etre’ was rather better established in the UK than I had anticipated. It seems that its services business is less and less reliant on its proprietary hardware, and that’s just as well. Having said that, they will surely have a secure market for application management for many years to come, as there can’t be many third-party players out there specialising in Unisys apps! In particular, the usual suspect Indians really don’t figure on Tait’s key competitor list. But in any event, the UK can’t carry the load for the rest of Unisys singlehandedly, so we rather hope the rest of the business can (re)find its purpose before too long.