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    Hi Thomasina,

    KAZ is on my watchlist, but I have not yet analysed them to the same extent as some other businesses out there.

    Going forward, reports from out of Europe (3/12/02 - Morgan Chambers) suggest that the European IT outsourcing market will gather strength in 2003, and that maturity of development will result in IT outsourcing opportunities being re-rated during 2003.

    Will this translate to Australia, and the likes of KAZ?

    o answer this, I need to do some divisional analysis of KAZ, but having regard to the calibre of their business structure, I think that the catalysts should be there for a possible re-rating in 2003.

    IT Services and Outsourcing (excluding Aspect) accounted for 1/3 of KAZ's business performance during FY02. Adding in Aspect to the equation, and that figure rises to ~50%, rivalling the Business Processing (or BP) outsourcing activities.

    Either way, KAZ is positioned to benefit from a renewed emphasis on ITT outsourcing initiatives during 2003 (the next phase of business cost reductions /Sigma Six initiatives, etc).

    Equally, however, the chances of super normal margins being achieved are unlikely.

    Going forward, KAZ must:
    carefully price its offerings (ie: inclusive of activities, with strongly backed assumptions, and clearly defined change management /control mechanisms inplace);
    carefully control its cost management profile (ie: as it directly relates to the IT and BP outsourcing initiatives); and
    carefully structure its head office /corporate overheads to ensure that this part of the business /governance process is not burdensome to the overall cost profile.

    As soon as I have analysed some more, I will post again in further detail.
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